MSCI, through its subsidiary MSCI Barra (Suisse) Sàrl, has signed an agreement to acquire Carbon Delta, an environmental fintech firm based in Zurich.

The transaction, whose financial terms were not divulged, was financed using existing liquidity. Deal completion is anticipated next month.

Both the companies will work towards creating a climate risk assessment and reporting offering for the institutional market.

The aim is to enable investors to better assess the climate change impact and conform to the requirements on climate risk disclosure.

These disclosure initiatives include the United Nations-supported Principles for Responsible Investing (UNPRI) and Task Force on Climate-related Financial Disclosures (TCFD), which are voluntary in nature.

North America and the European Union are developing mandatory disclosure requirements.

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Leveraging Carbon Delta’s modelling technology, MSCI can make an analysis of the climate scenario and evaluate transition and physical risks.

The companies will offer a climate risk metric dubbed MSCI Climate Value-at-Risk, which will measure the climate impact on the market value of the company.

MSCI head of ESG Remy Briand said: “We believe climate change will become one of the most important investment factors over the long term.

“Institutional investors should be able to analyse the exposure of their portfolios to climate risk while also being able to report on their climate strategy.

“We are pleased to come together with Carbon Delta to provide our clients with state-of-the-art climate risk analysis capabilities that can help shape investment management practices of the future.”