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💬 Climate Intelligence with EarthScan

My Climate Journey

Photo by Carlos Muza / Unsplash

Host: Jason Jacobs
Guest: Iggy Bassi | Founder & CEO | Cervest
Category: 💬 Opinion

Podcast’s Essential Bites:

[4:00] “Cervest is what we call a climate intelligence company. What that really means is we help governments, companies, NGOs, just better manage, mitigate and find opportunities within climate risk as well. So not only do we help you manage your risk, we help you think about well, how do you adapt to new types of risks? I think we are very much focused on physical risks, that's been our mainstay for the last three or four, four years. So we help companies think about how do you quantify risk? How do you think about risk over time? How do you think about the historic risk that's happened to your assets?”

[5:30] “I think for us, the narrative of the last couple of years has been very focused on decarbonization. And we think that's absolutely fundamental. But physical risk is locked into the system. So we've done enough damage to the Earth’s system. And now the Earth’s systems are basically responding with greater frequency, greater severity. So in many ways, even if we win the netzero race, we also have to think about the manifestation of physical risks, heatwaves, floods, droughts, these are locked into the Earth’s system. So these will get played out in the next three to four decades.”

[6:05] “We're very keen for people to understand […] the implications for [their] assets. What are the implications for your economies for human security, asset security? What does it mean for your earnings? What does it mean for new economic growth? What does it mean for migration, for instance? So in many ways, we often say that climate intelligence will be the new superpower to help you navigate the complexities of climate risk for the 21st century. But we also need everyone to have it. So in many ways, we want to democratize this superpower. So whether you're a house owner, you're a farmer in Ghana, you're my neighbor in Brazil, or you're a billion dollar company, we all need to become climate intelligent over time. […] So fundamentally, believing that open, democratized intelligence is core to the offering at Cervest.”

[15:38] “My biggest disappointment today with regulators is they haven't really harmonized standards yet. […] If you're a large company like General Electric or IBM, you're gonna have physical assets in multiple geographies. So if those multiple geographies are not unifying the standards will be very difficult for those companies to provide a unified picture of climate risk, physical risk, transitional risk, carbon risk. In a way, that's actually decision useful for investors for pension funds for asset managers for insurance companies to look at the risk and compare apples with apples. We haven't quite got there yet. So we are trying to exert pressure onto various regulators to say it's in your interest if you genuinely want to measure systemic risk, you need harmonization of standards across multiple geographies, because companies operate in multiple geographies, capital flows in every geography. So if you truly want to understand climate risk, you have to think about harmonization. I'm not sure we're going to see that at COP26.”

[16:53] “[There’s] enormous variability [in how stakeholders define climate risk]. I think, for some people, climate risk is all about carbon. For others, it's about the physical risks. We take a different view. We said you need to look at both sides of the coin, because in many ways, emission reductions are absolutely necessary, but insufficient by themselves. We have so much locked in heat for the next three or four decades, we have to look at, and we have to quantify physical risk. And we have to think about adaptation.”

[26:03] “We have a freemium model. So anyone can use it for free for a certain amount of assets for up to 10 assets beyond which you go on to a paid tier. So it's all the way up to about 25,000 assets you can have on various portfolios. And we allow you to build as many portfolios as you like. So there are some groups that we are working with that are building their portfolio for European hotels, US hotels, hotels of a certain age, hotels that are exposed to a different type of risk factor, for instance. Because that's how they think about making decisions. So we allow a huge amount of flexibility in the tool. Excited to open this up to the world in the early part of next year.”

[29:32] “We have a product called EarthScan, which is a freemium product, it's open to everybody. It's going to be pre-populated by the time it goes to general availability. There'll be over half a billion assets in there across the world, heavily populated for USA and Europe first, progressively, we'll be adding more data to that. Now that is going to be used by governments, large enterprises to help them figure out what their risk is, baseline their risk and then help them make better decisions on things like adaptation, investments.”

[30:03] “The second product is […] pretty much exclusively built for capital markets. Now that I know the risk on that asset, how do I reprice my equity, my credit? How do I reallocate my portfolio, for instance? So larger banks, for instance, are looking at this and […] then overlay this with my credit portfolio to say, how much risk am I sitting on? And how do I fundamentally reprice that risk? Because ultimately, banks are also subject to disclosure laws and risk models. They want to optimize returns, they want to figure out, am I sitting on too much high carbon, high physical risk assets?”

Rating: ⚡⚡

🎙️ Full Episode: Apple | Spotify (Original Title: "Startup Series: Cervest")
🕰️ 53 min | 🗓️ 11/04/2021
✅ Time saved: 51 min

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