ON Climate Qorus Banking Innovation Awards 2022 - Winner

Climate change is a grave global issue that impacts us all and we are now at a critical juncture where it can no longer be ignored. The National Oceanic and Atmospheric Administration (NOAA) released its annual research on 2021 climate events at the start of the year, reporting that there were 20 weather and climate disasters that caused $1B or more in damage in the US alone. Collectively, these events caused over $145B in damage – an astounding figure. NOAA’s research also shows that the average number of annual billion-dollar events continues to increase – with an average of 17.2 over the past five years, compared to 5.3 during the 1990s. Given these alarming figures, it has become critical for commercial lenders to assess how material and manageable their climate change exposure is. To do this, lenders must look to gather more data, and conduct quantitative and qualitative scenario analysis – a key reason behind the development of ON Climate, which OakNorth Bank used in 2021 to undertake a granular scenario analysis of the possible impact of climate risks on its borrowers and capital requirements. ON Climate, part of the ON Credit intelligence Suite, provides US commercial lenders and OakNorth Bank in the UK, with insights on climate risk in their commercial portfolio that can inform their approach to every stage of the credit lifecycle: from origination and monitoring, to conducting portfolio-level scenario analysis, responding to investor, board, and regulatory requests, as well as setting credit strategy. Its forward-looking climate scenarios are constantly updated with the most recently available data, including high frequency third party data sets, to ensure its bank partners have the most accurate view of climate impact across their portfolio. Furthermore, it enables OakNorth Bank to make faster and smarter decisions on which borrowers or sub-sectors in its portfolio are most likely to suffer or benefit from climate change, and as a result, mitigate risk and identify origination opportunities to lend more. By using traditional and non-traditional data sources, the credit technology also enables OakNorth Bank to better understand climate risk with a holistic, forward-looking view of the ever-changing and evolving landscape around climate issues.