- FTSE Russell and Planetrics signed an MoU to develop climate-scenario based indices and analytics across asset classes.
- Planetrics will provide physical and transition climate risk modelling to support index design and data inputs.
- New indices are expected later this year, with FTSE Russell responsible for governance and commercial distribution.
London-based FTSE Russell and Planetrics are preparing a new generation of climate-scenario based indices, as investors demand sharper tools to measure how physical shocks and transition risks could affect portfolios.
The two organisations announced a Memorandum of Understanding focused on joint development of climate-scenario indices and analytics. FTSE Russell, LSEG’s global index provider, will work with Planetrics, SLR’s climate-risk analytics and scenario modelling platform, to build frameworks that help investors assess risk across a range of possible climate futures.
The planned collaboration comes as climate risk is becoming harder for institutional investors to treat as a separate ESG screen. Rising physical losses, uneven policy action, sector-level transition pressures and supply chain exposure are now shaping capital allocation decisions. For asset owners, insurers, banks and fund managers, the question is no longer only which companies disclose climate data. It is whether portfolios can withstand different climate pathways.
Planetrics Models Physical And Transition Risk
Under the proposed partnership, Planetrics will make its proprietary physical and transition climate risk analytics available to FTSE Russell. Its modelling and scenario tools will support the development of indices across asset classes.
The work is expected to cover both the direct effects of climate change and the market effects of the low-carbon transition. Physical risks can include extreme weather, heat stress, flooding and infrastructure damage. Transition risks can include carbon pricing, regulation, technology shifts, changing demand and cost pressures.
For investors, the value lies in translating those risks into company-level and portfolio-level signals. Climate scenarios can show how different sectors may respond to policy change, regional disruption or cost shocks. That matters for long-term capital planning, risk budgeting and stewardship.
Stephanie Maier, Head of Sustainable, FTSE Russell, comments: “As climate considerations continue to drive the investment landscape, we are delighted to be collaborating with Planetrics as we continue to innovate to the needs of the market. The intended partnership reflects our ongoing commitment to developing transparent, innovative indices that draw on robust research and analytical frameworks to help our clients better invest for and through the low carbon transition.”
FTSE Russell To Govern And Distribute The Indices
The organisations intend to work together on the analytical frameworks and data inputs behind any new indices. FTSE Russell will be responsible for governance and commercial distribution. Planetrics will support the work through its research expertise, market knowledge and technical depth.
That governance role is important. Climate indices are increasingly used as benchmarks, risk tools and investment products. As a result, index methodology, data quality and scenario assumptions carry direct implications for asset allocation.
Investors will be watching how the indices define climate pathways, weigh physical versus transition exposure, and reflect sector and regional differences. Those choices can affect which companies enter or leave a benchmark, how portfolio risk is interpreted, and how climate strategies are explained to boards and clients.
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FTSE Russell and Planetrics anticipate launching new indices later this year.
From Climate Awareness To Climate Pricing
The proposed collaboration reflects a broader shift in sustainable finance. Climate risk tools are moving from disclosure support toward pricing, allocation and portfolio construction.
Thomas Bremner Bligaard, Executive Director, Planetrics, part of SLR, said: “This collaboration with FTSE Russell reflects where the market needs to go, from acknowledging climate risk to actually pricing it. Our modelling captures a range of plausible futures, including physical shocks and uneven transitions across regions and sectors, then traces how costs, supply chains and competitive positions evolve at a company level. That granularity translates into portfolio signals precise enough to support better allocation decisions and stronger risk management.”
For the C-suite, the development points to a tougher investment environment. Companies may increasingly be assessed not only on emissions targets, but on their exposure to climate shocks, regulatory change and transition costs. For investors, the next test is whether climate scenario data can improve risk-adjusted decision-making without creating opaque or overly complex benchmarks.
If adopted at scale, these indices could help move climate analysis closer to mainstream portfolio construction. That would make scenario-based risk less of a reporting exercise and more of a financial discipline with global market consequences.
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