Climate X raises $18 m to help leading financial organizations price impact of climate change

Climate X raises $18 m to help leading financial organizations price impact of climate change
28 / 06 / 2024
By Marwa Nassar - -

Climate risk intelligence company Climate X has raised $18 million to accelerate its global expansion and help the world’s leading financial organizations price the impact of climate change across their physical asset portfolios.

One of the fastest-growing players in the $2 trillion climate adaptation market, UK-headquartered Climate X offers proprietary financial insights into the likely impact of climate risks on physical asset valuations, from residential and commercial properties to road, rail and power infrastructure.

Climate X’s data analytics platform is trusted by world-leading financial institutions and asset managers—including Legal & General, CBRE, Virgin Money, and Federated Hermes – to enable smarter investment and portfolio management decisions against a backdrop of tightening regulations regarding capital requirements related to climate risk exposure.

Climate X was co-founded by CEO Lukky Ahmed and COO Kamil Kluza, who have over 30 years of combined corporate risk management experience. Lukky has led stress testing and risk transformation programs for organizations like HSBC Bank and Lloyds Banking Group, while Kamil has modeled risk for organizations such as Barclays, MUFG, and Accenture and was involved in designing the first-ever tranche of coco bonds.

Recognizing an unmet need for more defensible and scalable climate risk modelling in financial services, the duo set about building the technology behind Climate X. Their unique risk assessment model uses a combination of Digital Twin of the Earth, physics and AI, underpinned by more than 500 trillion data points, including a proprietary library of 1.5 billion individual assets and 44 million miles of infrastructure.

Lukky Ahmed, CEO at Climate X, said “In just over one year since going to market, Climate X has become one of the world’s fastest growing providers of physical climate risk data and analytics, driving value for global financial services clients with over $6.5 trillion in combined AUM. Assessing the impact of physical climate risk on asset valuations and business operations is now a necessity, not a nice-to-have.”

“By demonstrating how our workflow solutions can drive both top and bottom-line growth, we have redefined physical climate risk solutions from mere compliance tools to competitive advantages that enhance business outcomes for our customers and their clients.”

“Climate X is driving value for global financial services clients with over $6.5 trillion in combined AUM. Assessing the impact of physical climate risk is now a necessity, not a nice-to-have,” said Lukky Ahmed, CEO and co-founder of Climate X.

As easy to navigate as Google Maps, the Climate X platform allows clients to model the future likelihood of 16 different climate hazards—from extreme heat to tropical cyclones and flooding—across eight warming scenarios over a 100-year time horizon, right down to the individual asset level.

Translating these risks into expected annual losses, Climate X’s technology then allows clients to determine the ROI of taking pre-emptive climate adaptation action based on a range of 22 different interventions.

Kamil Kluza, COO at Climate X, said “The climate adaptation market will be a vital economic enabler in the years ahead, yet to date, it has been dominated by expensive consultancies reliant on manual human analysis and black box solutions that reduce climate risk to a single rating or score.”

“We’re breaking the mold with technology designed to drive business value by helping our clients answer critical questions about their asset portfolios and investment strategies: where to buy, where to sell, how to build portfolio resistance, reduce insurance premiums and protect asset values.”

Climate X will use the new funding to accelerate its expansion in Europe, North America, and APAC. It will initially build out the commercial team in its recently opened New York office to service growing customer demand across the region from major financial institutions, global asset managers and real estate investors. The company will also look to augment its products in line with evolving commercial and regulatory requirements by incorporating additional data sources into its platform.

Roni Hiranand, Principal at GV, said “Climate X is a game-changer that accurately quantifies and addresses the impact of climate risk. We’re impressed with Kamil Kluza and Lukky Ahmed’s deep expertise in corporate risk management and believe they have the right skill set to create a next-generation climate risk intelligence product. We’re excited to support the Climate X team as they work towards a vision of becoming the backbone for all climate risk-related decision-making within financial organisations.”

Rajiv Choudhary, Head of Stress Testing Modelling at Virgin Money, said “Climate X has provided knowledgeable expertise in the climate change risk space, with authoritative data to support Climate scenario analysis work. This enables the identification of climate-related risks and opportunities, and an assessment of the resilience of the Group’s business model.”

Paul Morgenthaler, Managing Partner at CommerzVentures, said “With the escalating risk of floods, heatwaves, wildfires, and other climate impacts, physical risks to properties are growing exponentially. Real estate, as the world’s largest asset class, is increasingly mispriced. Climate X provides one of the very few tools to quantify them adequately, while enabling ROI-based adaption for individual properties. In addition to complying with mandatory climate risk disclosures, Climate X’s customers get immediate business value. The market opportunity is massive, and Climate X has assembled the leading team in the market.”

Heidi Lindvall, General Partner at Pale blue dot, said “With climate adaptation high on everyone’s agenda, the demand for the most comprehensive tech solution remains more critical than ever. Climate X has proven to be the superior choice in this space, and, with their deep domain expertise, they are best positioned to successfully serve the financial services market.”

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