German Professor's Method Quantifies Climate Risks in Financial Portfolios

Prof. Dr. Martin Simon, a Frankfurt UAS academic, has developed a groundbreaking methodology to quantify climate risks in free portfolio sites. Funded by the Federal Ministry of Education and Research and the Hessian LOEWE program, this innovation could revolutionize climate assessments.

The new methodology, presented at the Banque de France, aligns the temperature of free portfolio sites with climate transition goals. It was developed by Prof. Dr. Simon, Finnish researchers, and the Frankfurt software company right°. The European Banking Authority has already employed this X-Degree Compatibility Model in a pilot project, analyzing the climate impact of European banks' credit portfolios in degrees Celsius.

Prof. Dr. Simon's work, conducted as part of his innovation professorship and the ReMeDI project, has significant implications. It demonstrates that investments and financing play a critical role in climate expansion, enabling large-scale infrastructure modernization and emissions reduction measures. In Germany, a special fund of 500 billion euros supports credit-financed investments for climate neutrality by 2045, addressing infrastructure deficits and future growth while coping with uncertainties in long-term climate development predictions.

Prof. Dr. Simon's methodology, funded by the Federal Ministry of Education and Research and the Hessian LOEWE program, offers a precise way to manage climate risks in free portfolio sites. The European Banking Authority's endorsement and the potential impact on Germany's climate neutrality fund underscore its importance. This innovation could help steer financial decisions towards a sustainable future.