Deutsche Bank's tool maps climate-change investment risks

By Emily Chasan

Deutsche Bank AG’s asset-management unit is using a detailed map to determine where natural disasters spawned by climate change may pose the greatest risks to its investment portfolios.

Deutsche Asset Management and Four Twenty Seven, a California climate advisory firm, mapped the locations of more than 1 million corporate, manufacturing and retail sites globally to gauge companies’ exposure to hazards such as hurricanes, heat waves, floods, droughts and wildfires. Four Twenty Seven built the map tool.

While such models previously have been used to predict catastrophic damage to insured assets, this is the first time it has been done for investment purposes, Frankfurt-based Deutsche Bank said Wednesday in a report.

“We were feeling that all of the assets and energy going into carbon footprinting were not addressing the immediate risks to us,” said Michael Lewis, head of ESG thematic research at Deutsche Asset Management, which oversees 711 billion euros ($824.5 billion).

The firm plans to use the information for passive investment indexes, to debut next year, and as a tool for its analysts and portfolio managers, Lewis said. The indexes will be based on physical climate risk asset scores generated by the maps for individual holdings.

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