TP Icap has partnered with environmental risk management firm Speedwell to introduce a new index designed to utilize global weather data for monitoring climate change, enabling the trading of financial risks associated with its progression.
The Climate Index, according to the partners, aims to equip market participants with reliable data to enhance their investment and hedging strategies while effectively managing climate-related risks. Developed and maintained by Speedwell, the index aggregates average global temperature data sourced from 50 independent national weather stations worldwide.
Nicholas Ernst, Managing Director of Weather Markets at TP Icap, commented, “The launch of this index has the potential to fundamentally alter how the financial implications of global climate change are assessed. For the first time, this comprehensive data will allow us to quantify the effects of future temperature variations.”
He further emphasized, “Climate change poses a substantial financial risk, and establishing markets based on this data marks a crucial advancement in both measuring that risk and comprehending the costs of climate change as we transition to a low-carbon economy.”