Why company level climate risk analysis needs more than a registered address: Lessons from Climate Week NYC

Marc Evans, Managing Director, XDI

One of the questions I keep hearing here in New York is deceptively simple: how can an investor or lender assess a company’s physical climate risk if they do not know where it actually operates?

The question points to a structural blind spot in sustainability data. Most regulatory frameworks, ratings agencies and company datasets were built around large listed companies that publish disclosures. But much of the real-world exposure sits elsewhere: in privately held manufacturers, supply chains and operating sites embedded within corporate groups and value chains. Many never publish the information analysts need.

This is not just a reporting problem. At UNEP FI’s Global Roundtable in London during Climate Action Week this June, the central message was that finance must move at pace from ambition to implementation and that doing so requires more available, consistent and decision-ready sustainability data. UNEP FI’s physical-risk guidance is more specific: exposure depends on the geographic location of a counterparty’s assets and value chain. Yet granular asset-level information remains difficult for financial institutions to source.

That is beginning to change. Company data can increasingly be observed rather than simply self-declared, and refreshed continuously rather than annually. The question is no longer only what a company reports, but where it operates, what happens at each site, how those sites connect to the wider corporate group and what risk sits there. This is a revolution in company asset disclosure and associated climate risk. 

Last week, XDI announced a new partnership with Veridion designed to address that problem. The partnership brings together Veridion’s continuously updated company and operating-location intelligence with XDI’s climate science, engineering and financial risk models. The aim is to provide a more complete and accurate picture of a company’s physical climate risk by connecting where it operates with its corporate structure and the potential financial impacts.

Climate risk starts with where a company actually operates

A registered address is useful for establishing legal identity. It may be a head office, a company-secretarial address or the premises of a professional adviser. It does not necessarily tell an analyst where a company makes products, stores inventory, delivers services or relies on critical infrastructure. Nor does it reveal the commercial importance of each location: what happens there, how much it contributes to the company’s operations or revenue, and what disruption or greater resilience at that site could mean for the business as a whole.

Those distinctions matter because two sites owned by the same company can have very different risk profiles. They may face different hazards, contain different types of buildings and equipment, play different roles in the business and have very different consequences if disrupted.A credible company level assessment therefore needs to answer more than ‘Where is this entity registered?’ It needs to ask: Where does the business operate? Which entity is associated with each location? What activity occurs there? How significant might that site be to the wider company? How confident are we in the underlying information?

The missing logistical picture

For a single asset with a verified address, physical climate risk analysis can begin with a relatively clear location. The challenge becomes much larger when the subject is a multinational company, a borrower with multiple subsidiaries or an investment portfolio containing thousands of companies.

Asset location information is often incomplete, inconsistent or difficult to connect across corporate groups. A lender may know the legal counterparty but not its full operational footprint. An investor may hold the parent company while much of its physical exposure sits within subsidiaries and value chains. Even when a location is known, the available record may say little about what happens there or whether the site remains active.

Without that operating picture, climate risk analysis can miss material locations, assign risk to the wrong entity or treat every identified site as equally important. The result may look precise while still leaving major gaps in the company-level view.

From location intelligence to physical and financial risk

Veridion maps corporate entities and groups to operating locations and adds information about the activity, estimated scale and status of each site, together with source provenance and confidence indicators. Its data covers approximately 600 million companies and more than two billion buildings, with updates each week.

XDI can then apply forward looking hazard, vulnerability and engineering models to the complete company assets, not just those in fiduciary filings. Analysis can estimate exposure, physical damage, disruption and relevant financial metrics across different time horizons and climate scenarios. Results can be aggregated from individual locations to companies and portfolios.

XDI’s Multiple Company Intelligence already supports physical climate risk assessment across more than 40,000 companies and subsidiaries, including situations where clients do not hold complete asset-location data. The partnership with Veridion has the potential to expand that operating picture significantly and allow analysts to set thresholds that reflect the confidence and purpose of an assessment.

Artificial intelligence can support the discovery and connection of complex corporate structures, supply chains and operating footprints. This adds more accuracy to XDI’s underlying company physical climate risk calculations. The value comes from combining better company and location intelligence with transparent climate, engineering and financial analysis.

Why do investors and lenders care?

A richer operating picture enables more useful questions. Which locations contribute most to a company’s risk? Which companies drive the largest concentrations within a portfolio? How might risk change across time horizons and climate scenarios? Where is deeper due diligence warranted? Which companies should be prioritised for engagement? And where could adaptation or resilience investment make the greatest difference?

It can also help move physical climate risk analysis closer to established financial decisions. Rather than stopping at a map of hazard exposure, organisations can use the results to inform credit assessment, investment and exit analysis, portfolio construction, company engagement and continuing monitoring as corporate footprints and climate conditions change.

The partnership is already being applied through a collaboration with Morningstar Sustainalytics to further develop its physical climate risk product for asset managers and asset owners. The goal is to address a persistent gap in existing tools: translating asset-level climate hazard exposure into financially relevant insights for investment decisions.

The conversation in New York

On a personal note, as my first NY Climate Week, the energy and enthusiasm was palpable. I luckily got to finish my NYCW with our friends at Veridion’s Climate Week Dinner, “What Can Be Built Today: ESG Intelligence on Live Company Data”. It was great to meet so many people from the financial services data world, such as S+P, MorningStar, Veridion and more. My main takeaway is that if we are putting physical climate risk data into financial services data streams, then we are making an impact. The world still runs off finance and risk, and adding physical climate risk to this shows the world is taking notice. 

After spending time looking at trends that are only heading in one direction, it was amazing to hear that the work to make adaptation as real as mitigation efforts is going strong across the US. 

The direction of travel is clear. Financial institutions increasingly need to understand not only whether a company is exposed to physical climate hazards, but where that exposure sits, how it could affect the business and what decisions should follow.

That starts with getting closer to the operating reality of the company. A registered address may tell us where the paperwork lives. Understanding physical climate risk requires us to find where the business does.

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Read more about XDI and Veridion’s partnership: https://xdi.systems/news/xdi-and-veridion-unlock-a-new-era-of-company-climate-risk-analysis

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