ESG-rating as a key to unlock financial sector engagement with planetary tipping points and systemic climate risk
| Reference number | |
| Coordinator | Kungl Vetenskapsakademien Kva - Global Economic Dynamics and the Biosphere Programme (GEDB) |
| Funding from Vinnova | SEK 5 527 385 |
| Project duration | November 2019 - November 2023 |
| Status | Completed |
| Venture | Innovations for a sustainable society |
| Call | Innovations for a climate-neutral future |
Purpose and goal
The project aimed to bring together Earth system scientists with macroeconomists and experts in the financial sector to deliver improved methods for estimating the environmental impact of companies and investments, thereby contributing to enhanced ESG methodologies both in Sweden and internationally. A tool, Earth System Impact score (ESI), has been tested in the mining sector, and use cases are being developed for various types of organizations (investors and companies).
Expected results and effects
n interactive, web-based tool that enhances the understanding of ´computable general equilibrium (CGE)´ models for a wide audience and facilitates the analysis of interactions between different environmental policies. A tool that, based on company CO2 emissions, water and land use, considers the interactions between these three and calculates a measure of planetary impact beyond just CO2 emissions. The ESI tool has been tested in the mining sector and is continuously tested to develop examples of how ESI can be used depending on the type of organization (investors, companies).
Planned approach and implementation
An interdisciplinary research group developed both WALRAS and ESI. The latter by connecting two modelling methods: LPJmL (global dynamic vegetation model) and a feedback model to derive amplification factors that can be used to calculate Earth system impact through information on a company´s CO2 emissions, water, and land use.