Unwritten: integrating climate risk into financial models
According to a 2022 IMF working paper, ‘Stress Testing the Global Economy to Climate Change-Related Shocks’, it is estimated that large and interconnected economies vulnerable to climate change could trigger a drain of $1.8 trillion in international reserves. Combined with the estimates that 2024 will be the hottest year on record and that ocean temperatures are reaching new records each day, the material impact of climate change cannot be underestimated.
Climate change is no longer just an environmental concern but a macroeconomic force capable of reshaping global markets and economies, one that necessitates the involvement of public and private market participants. For financial decision makers, the quantification of climate factors can no longer be a peripheral consideration but a core priority.
Despite the estimated negative material impact, climate change also presents unparalleled commercial opportunities, with the transition to a low-carbon economy poised to generate winners as much as the potential to create many losers. Former Bank of England Governor, Mark Carney famously dubbed climate action as "the greatest commercial opportunity of our time."
This is not mere optimism but is backed by the potential for innovation and growth in new markets. Companies that can accurately model and navigate the climate transition may unlock new value chains and revenue streams, positioning themselves at the forefront of a sustainable economic revolution.
The financial materiality of climate change presents both risks and potential opportunities for investors and companies. In this context, Unwritten has emerged as a player aiming to equip the financial sector with the tools to not only understand but also how to act on this materiality. Their approach seeks to help organisations grapple with the realities of climate-related financial factors, transforming perceived risks into possible rewards.
The Origins of Unwritten:
The story of Unwritten begins with its founders, Amos Wittenberg and Dr Phillip Marks.
Amos' career path started in financial journalism, focusing on investigative work in financial crime and compliance. This laid the foundation for understanding of risk in financial services, albeit from a different angle than Unwritten. A pivotal moment came when Wittenberg decided to pivot towards technology and data science. He taught himself Python and delved into the world of big data, eventually joining Palantir Technologies.
There he met Dr. Phillip Marks, who had joined Palantir after completing a DPhil at Oxford in climate physics and energy system modelling. Together they spearheaded Palantir's first climate data team. This experience ignited both Marks’ and Wittenberg’s passion for climate tech and sowed the seeds for Unwritten.
Unwritten founders, Dr. Phillip Marks (CTO) and Amos Wittenberg (CEO)
Unwritten's mission is to make financial sense of the climate transition. The company assists clients in assessing risk, managing exposure, and capturing the opportunities that arise from the transition to a more sustainable economy. Unwritten's approach is not just about mitigating risks but also about framing the climate transition as a commercial opportunity teeming with potential for innovation and growth.
The Future Through Wittenberg's Eyes:
Wittenberg envisions a future where climate finance is seamlessly integrated into the broader financial sector. He wants to help clients make considerations associated with rising temperatures and the energy transition a core part of financial decision-making. This integration is crucial, as it reflects the understanding that climate-related considerations are not external to the economy but are deeply embedded within it.
Wittenberg is optimistic about the evolution of disclosure frameworks and the role of regulation in educating financial decision-makers. He believes that starting with reporting can lead to a broader understanding of the tools and approaches necessary to incorporate climate considerations into investment decisions.
Unwritten's innovative approach to climate risk is encapsulated in its name. The company emphasises that the future is not predetermined; it is unwritten. This philosophy empowers clients to allocate capital towards building a future that creates value, not just captures it. By focusing on the opportunities as well as the risks, Unwritten encourages a positive and proactive stance towards climate change.
Challenges and Triumphs:
During our conversation, Amos candidly shared the challenges faced by Unwritten, from navigating regulatory landscapes to overcoming scepticism in different markets. These challenges, however, are met with a multidisciplinary team that brings together expertise from climate finance, economics, and data science. This collaborative environment fosters learning and innovation, driving the company's mission forward.
One of Wittenberg's favourite moments so far was during a review with an existing employee who expressed that working at Unwritten was his "dream job." This personal experience underscores the broader enthusiasm and determination that Amos and his team share in tackling the vital mission of integrating climate risk into financial decision-making. "It was incredibly rewarding to hear someone so passionate about our work," he reflects. "It's a testament to the importance of what we're trying to achieve and the calibre of people who are drawn to this challenge."
Indeed, the Unwritten team have faced the daunting task of educating clients and the broader financial community about the need to incorporate climate factors into their models and decision-making processes. "It's really hard selling new products that people aren't used to and familiar with," Wittenberg acknowledges. "You find that the sales process involves a lot of education and hand-holding." He has however come to see this engagement and education as a privilege as it allows Unwritten to play a pivotal role in shaping the future of climate finance.
Wittenberg encourages individuals aspiring to contribute to climate solutions to leverage their unique skills and influence. Whether it's through personal choices, professional endeavours, or advocacy, every action contributes to a larger collective effort to address climate change.
The Way Forward:
Unwritten's story is one of innovation and expertise. Amos’ journey from financial journalist to climate tech pioneer exemplifies the transformative power of applying specialised knowledge to address pressing challenges. As Unwritten continues to integrate climate risk into financial models, the company offers a robust framework for the industry to follow. This approach holds the promise of cultivating a more sustainable and resilient future for the global economy.
While the path forward may not be without its complexities, Unwritten's pioneering work inspires confidence in the financial sector's ability to adapt and lead the way towards prosperous economies that are sustainable within our planet’s physical limits.
Learn more about Unwritten for yourself!
If you would like to learn more about Unwritten, you can access their website here - https://www.unwritten.co
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