Morningstar Sustainalytics Announces Strategic Agreement with XDI, a Global Leader in Physical Climate Risk Analysis

Collaboration offers investors new Physical Climate Risk Metrics that can manage
physical climate risks and support responding to TCFD reporting standards

TORONTO, Sept. 27, 2022 /PRNewswire/ -- Morningstar Sustainalytics, a leading global provider of ESG research, ratings, and data, has established a strategic agreement with XDI, an award-winning global leader in physical climate risk analysis on companies and their operational assets. XDI specializes in statistical and probabilistic models that assess how extreme weather and climate change impact physical assets and business operations. With more institutional investors seeking sophisticated climate data and analysis to manage risks and fulfill climate disclosure requirements, Morningstar Sustainalytics, in collaboration with XDI, is well-positioned to deliver high-quality physical climate risk solutions. Recently, Morningstar Sustainalytics launched Physical Climate Risk Metrics, which are powered by XDI's state-of-the-art Climate Risk Engines.

The scenario analysis in the Physical Climate Risk Metrics quantitatively estimates the direct physical climate risks of more than 12,500 companies worldwide. This company-level analysis is underpinned by a database of over 12 million assets and facilities, enabling comparative analysis for investors. XDI's Climate Risk Engines power bottom-up analysis of the relative exposure and vulnerability of companies to the physical impacts of climate change across seven physical hazards. The results are expressed as three metrics, including High Risk Assets, Asset Damage Risk, and Productive Capacity Loss. Investors can leverage this scenario analysis, comparable across different companies and industries, to support risk identification, climate disclosure requirements, product creation, engagement activities, and security selection.

Physical Climate Risk Metrics is the first new offering in Morningstar Sustainalytics' suite of Climate Solutions. The firm has been building its Climate Solutions unit as well as its product suite, research capabilities, and technology infrastructure to advance its innovation agenda. With more than 100 in-house professionals across a variety of disciplines, the firm's unit is focused on meeting the needs of the financial services industry for climate-related research and data. The Climate Solutions unit is bolstered by Morningstar's recent acquisition of Aquantix, a Montreal-based technology company that provides property-level climate risk data services for the real estate and mortgage lending industries. With an experienced in-house team, the XDI agreement, and Aquantix's technology, Morningstar Sustainalytics can provide best-in-class climate solutions to its clients.

"Our institutional investor clients are looking for comprehensive climate tools such as ratings, research, and data to respond to TCFD and EU Action Plan reporting standards and to identify and mitigate their climate-related portfolio risks," said Azadeh Sabour, Morningstar Sustainalytics' Senior Vice President of Climate Solutions. "Our collaboration with XDI allows us to provide our investor and banking clients with high-quality insights and solutions so they can address the risks emanating from the climate crisis. We look forward to a long and successful relationship with XDI."

"Accessing comparable and meaningful company-level physical climate risk data can pose significant challenges for investors seeking to align their investments to broader climate objectives," said Rohan Hamden, CEO of XDI. "XDI's ability to geospatially match over 12 million assets to the companies that own or lease them is a unique market differentiator. With our highly focused technology and Morningstar's scale and expertise, investors can access a robust set of structured metrics to understand the physical climate risks that their portfolio companies may face. We are delighted to team up with Morningstar Sustainalytics and demonstrate the detail and reach of our modelling of physical climate risk to their institutional investor clients."

For more information on the Physical Climate Risk Metrics, please visit here.

About Morningstar Sustainalytics

Morningstar Sustainalytics is a leading ESG research, ratings and data firm that supports investors around the world with the development and implementation of responsible investment strategies. For 30 years, the firm has been at the forefront of developing high-quality, innovative solutions to meet the evolving needs of global investors. Today, Morningstar Sustainalytics works with hundreds of the world's leading asset managers and pension funds who incorporate ESG and corporate governance information and assessments into their investment processes. The firm also works with hundreds of companies and their financial intermediaries to help them consider sustainability in policies, practices, and capital projects. With 17 offices globally, Morningstar Sustainalytics has more than 1,600 staff members, including more than 500 analysts with multidisciplinary expertise across more than 40 industry groups. For more information, visit www.sustainalytics.com.

Disclaimer

Morningstar Sustainalytics produces various ratings, assessments and metrics which include assumptions of future events, which may or may not occur or may differ significantly from what was assumed. These ratings, assessments and metrics are statements of opinions, subject to change, are not to be considered as guarantees, and should not be used as the sole basis for investment decisions. Morningstar Sustainalytics does not provide investment advice or any other form of (financial) advice and nothing within this press release constitutes such advice.

Caution Concerning Forward-Looking Statements

This press release contains forward-looking statements as that term is used in the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations about future events or future financial performance. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and often contain words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," or "continue." These statements involve known and unknown risks and uncertainties that may cause the events we discuss not to occur or to differ significantly from what we expect. For us, these risks and uncertainties include, among others, failing to maintain and protect our brand, independence, and reputation; liability related to cybersecurity and the protection of confidential information, including personal information about individuals; liability for any losses that result from an actual or claimed breach of our fiduciary duties or failure to comply with applicable securities laws; compliance failures, regulatory action, or changes in laws applicable to our credit ratings operations, or our investment advisory, ESG, and index businesses; failing to respond to technological change, keep pace with new technology developments, or adopt a successful technology strategy; the failure to recruit, develop, and retain qualified employees and compensation expense associated with these activities in a period of inflation and rising wage scales in the markets where we operate; inadequacy of our operational risk management and business continuity programs in the event of a material disruptive event, including an outage of our database, technology-based products and services or network facilities; failing to differentiate our products and services and continuously create innovative, proprietary, and insightful financial technology solutions; prolonged volatility or downturns affecting the financial sector, global financial markets, and global economy and its effect on our revenue from asset-based fees and credit ratings business; failing to maintain growth across our businesses in today's fragmented geopolitical, regulatory and cultural world; liability relating to the information and data we collect, store, use, create, and distribute or the reports that we publish or are produced by our software products; the failure of acquisitions and other investments to be efficiently integrated and produce the results we anticipate; the impact of the current COVID-19 pandemic and government actions in response thereto on our business, financial condition, and results of operations; challenges faced by our non-U.S. operations, including the concentration of data and development work at our offshore facilities in China and India; our indebtedness could adversely affect our cash flows and financial flexibility; and the failure to protect our intellectual property rights or claims of intellectual property infringement against us. A more complete description of these risks and uncertainties can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. If any of these risks and uncertainties materialize, our actual future results and other future events may vary significantly from what we expect. We do not undertake to update our forward-looking statements as a result of new information or future events.

SOURCE Morningstar Sustainalytics

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