USS calls on academics to explore divergence on climate risk data

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🗞️ Driving the news: UK pension fund USS has urged academic researchers to replicate landmark ESG ratings studies, focusing specifically on climate risk data
• The call aims to understand the causes and implications of divergence in current climate-related risk assessments used across the investment industry

🔭 The context: Recent analyses have shown substantial inconsistencies in climate risk scores assigned to the same companies by different ESG data providers
• USS highlights that these divergences create uncertainty for institutional investors, affecting portfolio decisions and risk management strategies
• By repeating prior ESG studies in the context of climate-specific metrics, academics could help clarify the reliability and comparability of available data

🌍 Why it matters for the planet: Accurate climate risk data is critical for directing capital toward low-carbon solutions and avoiding investments that exacerbate greenhouse gas emissions
• Misaligned or inconsistent ratings can slow the transition to net-zero economies, making investment decisions less effective at mitigating environmental impact.

⏭️ What’s next: USS plans to collaborate with universities and research institutions to replicate and extend the study, aiming to provide investors with more transparent, validated climate risk metrics
• The findings could inform ESG data standards and improve alignment between reported scores and real-world emissions outcomes

💬 One quote: “There is a great gap in the market on climate risk divergence — repeating landmark ESG studies would help fill it.” – USS climate lead

📈 One stat: Institutional investors face climate risk data discrepancies of up to 40% between major ESG rating providers, according to recent market analyses

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