Review: BlackRock+Rhodium Climate Risk Analysis

By April 18, 2019 July 23rd, 2019 One Comment

Earlier this month, BlackRock published a report detailing a climate risk analysis they commissioned by the Rhodium Group, a New York-based research advisory firm. Through their collaboration with the Climate Impact Lab, Rhodium Group and its partners developed an econometric analysis of climate impacts to U.S. municipal debt at the metropolitan statistical area (MSA) level. Other industries covered in this analysis include commercial mortgage-backed securities (CMBS) and electric utilities. The underlying scientific methods were originally published in the journal of Science in June 2017.

The BlackRock+Rhodium (BR+R) analysis breaks down the potential net economic impact — relative to where economic growth would have been absent the effects of climate change — for 383 MSAs under a “no climate action” (RCP 8.5) scenario. The U.S. municipal bond climate risk estimates are provided in the form of Average Annual Losses (AAL) to Gross Domestic Product (GDP).

Key Findings

– About 58% of metropolitan areas face climate-related GDP hits of 1% or more by 2060–2080 under a “no climate action” scenario.

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