BlackRock BLK has announced a deal to acquire the Climate Change Scenario Model of Baringa Partners and integrate the same into its own Aladdin risk management system. Financial details and terms of the agreement have not been disclosed yet.

Aladdin Climate is used by BlackRock’s Financial Markets Advisory group to help clients understand and reduce the financial impacts of climate change on their portfolios. By measuring the impact of both physical and transition risks, it helps money managers to build portfolios and manage the investment process easily.

Baringa's modeling is used by governments and financial services. The solutions help manage climate risks and supports net zero commitments, TCFD reporting, regulatory reporting, investment and capital-allocation strategies.

The collaboration sets the standard for modeling the impacts of climate change. Further, it exhibits the adaption to a low carbon economy on financial assets to its investors, banks and other clients. Nurturing on Aladdin Climate, both companies will develop climate-risk models as well as innovate climate analytics solutions.

Sudhir Nair, global head of the Aladdin Business at BlackRock, said, “Investors and companies are increasingly recognizing that climate risk presents investment risk. Through this partnership with Baringa, we are raising the industry bar for climate analytics and risk management tools, so clients can build and customize more sustainable portfolios. The integration of Baringa’s models and the ongoing collaboration between our firms will enhance Aladdin Climate’s capabilities, helping our clients understand transition risks in more sectors and regions than ever before."

Per Colin Preston, global head of Climate Solutions at Baringa, "Climate change is the number one challenge and opportunity of our generation. Having developed the leading Climate Change Scenario Model, we are excited to partner with BlackRock to accelerate the adoption of this solution by organisations across the globe. The integration of Baringa’s Climate Change Scenario Model into BlackRock’s Aladdin platform will inform the reallocation of capital across the global economy, accelerating the transition to net zero."

Our View

Over the years, BlackRock has acquired several firms across the globe, in turn expanding its footprint and market share. This partnership will help companies and investors understand the impact of climate change, and align their investment portfolios with global efforts to limit greenhouse gas emissions by mid-century.

Shares of BlackRock have gained 19.1% over the past three months, outperforming the industry’s rise of 15.2%.

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Currently, BlackRock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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