Green Success Stories

Assessing and Addressing Climate Risk

Green Success Stories

Green Success Stories shines the Green Spotlight on Matt Macunas, co-founder of Weather Trade Net. Matt describes his north star sustainability instincts from early on, his work in energy policy, in financing climate tech, in consulting, and in leading Weather Trade Net from the US side. He describes the many use cases of the climate risk data analysis his firm provides, from helping firms comply with regulatory requirements through helping them develop sound climate-risk planning, transparency, and readiness. Matt stresses the far-ranging involvement of sustainability in all our futures, and the openness of the field to people from all backgrounds and levels of prior knowledge who are ready to help in the fight against climate change.

Tell us about your sustainability journey.

I’ve always had as a philosophical or ethical north star the idea that humans should be working in pretty much symbiosis with the broader environment. That just made sense and was my instinct coming up through childhood. I tended to try to be efficient with my use of resources even when it was ridiculous or to my detriment. Because you know, I was just hewing to that same sort of philosophy.

It took until adulthood, after changing my college major three different times, to eventually land in a certain direction that pointed towards sustainability as a discipline. I started reading about solar panels and wind turbines and early model electric vehicles. I got pretty thrilled and wanted to contribute in my own minuscule way toward changing that inert mass of humanity at least just a little bit in the right direction.

Eventually as I studied I got involved in public policy legislation. And soon I caught the energy bug working for a chairwoman of a legislative energy and technology committee. I really started to be interested in deep dives on renewable energy and energy efficiency – playing offense on climate change and reducing carbon emissions.

After seven years at a legislative staff position, I worked for maybe a year and a half for a political consulting shop. I was trying to get them some sort of sustainability or energy clients so I could marry that natural instinct of mine up with the work.

I didn’t succeed at that, but I did succeed at landing at the nation’s first state-level green bank, which is a financing entity established by the state as a public-private partnership, so to speak, for bringing private capital into renewable energy and energy efficiency deployment, mostly on a distributed basis. We helped homeowners and small businesses get equipped with clean energy technologies.

I worked in sort of an intergovernmental flex position with policy and special projects and community outreach for another seven to eight years. Then, through the pandemic, I felt like I had overstayed my intention in that sort of position. So I hung out my shingle for consulting, eventually establishing myself among this constellation of early-stage startup founders and sustainability technology, not just on the climate change mitigation side but adaptation as well. That’s when I met Weather Trade Net about a year and a half ago. It had been formed about two to two and a half years ago as an upstart company for providing physical climate risk analytics for companies and communities to buffer against the advent of extreme weather and physical climate perils that are driven by climate change. It’s very much an adaptation informatics sort of company. And I’m the gentleman in the States.

Tell us more about Weather Trade Net. Do you reach out to clients or do they come to you? Run through an interaction that you might have with a client.

So it’s wonderful when they come to us. But you can’t quite rely on that. We do have a substantial amount of outreach, mostly founder-led, and content-led marketing on LinkedIn and elsewhere and on our opt-in email lists. We keep our name out there among that constellation of actors; it’s not a large market in terms of who else provides these sort of informatics. We make ourselves relevant in the market.

As an upstart company we tend to begin with some early-stage explorations and consultations as to why potential clients might need this sort of analytic product.

We’ve constructed our product to be a self-service platform. You put in your addresses or geocoordinates and out come the red flags, on a given time horizon on a given climate change pathway for future projections. This helps clarify which of your properties is exposed to what, outside of a given tolerance level and so on.

In early explorations, it’s useful to know why a potential partner client is interested in this sort of product because sometimes it’s driven by a regulatory imperative. There are emerging sustainability disclosure regulations that apply to bank, insurers and large and listed companies across most of the major economies in the world. These regulations are imposed by governments or central banks in a great many countries. I would ballpark that around 50 today are well in that process. The entirety of the EU is involved, with most of the member states having implemented or begun their legislative enablement for what the EU as a whole has said they’re going to do. In the U.S., California has passed some legislation, and the SEC is meditating on passing a similar rule. All of these are in the direction of mandatory physical climate risk disclosures for companies in the name of investor transparency, as to whether or not what they’re communicating for their future prospects is materially sound or if it’s exposed to risk that hasn’t yet been considered.

So it’s useful when talking to a client at early intake to see if it’s for that sort of compliance purpose and if they’re looking to fill that, to meet the floor of the rule when it comes to compliance, of if they plan to go beyond and actually know what the implications are for those risks, or if it’s for some other relevant purpose, such as voluntarily wrapping their arms around what their climate risk and therefore financial risk might be. Or it may be for some sort of innovative or civic purpose. We’ve been involved in things like stress testing the credit capacity of a sovereign or a given country or of an enterprise.

We could provide a layer in the overall assessment of let’s say public health peril or some sort of other social determinant that is informed by physical climate conditions. We could play an informative role when it comes to disclosing a variable of what the environment looks like when it comes to broader sorts of analyses too. So when we talk to a client, at first blush we need to suss those things out. Are you trying to comply with a mandatory regulation or are you running a mapping exercise for your entire country’s agriculture sector… It could be all over the board. So that’s an early consideration

So once you’ve figured out what the client really needs, then what?

We provide a combination of raw data and analysis. We run several types of reports. One of them is the backing data in XLS format. These include our risk scores which are proprietary in terms of how we weight de-biased downscaled climate predictive modeling.

Clients would have trouble doing that themselves using only the open data sources that are out there. That’s the proprietary part, how we run the methodology on these risk scores. Those are partly informed by climate indicators that are out there, such as heating degree and cooling degree days, number of days that are likely in a drought status, percentage increase in severe storm likelihood and severity, those sorts of things. We use longtime series meteorological observations, satellite imagery, and global climate models, all put together boiling down to the raw data that we could provide that could then be used on the client side. Clients can use this how they want, including siphoning off from us through an API that we could simply build into their system.

We could also qualitatively describe in our PDF reports what these sorts of things mean and what risks are emerging in their portfolio of properties. We can describe the frequency and amplitude of the risk, what are the most common ones and what are the most severe hotspots. Those are our main pieces of product right there.

In addition, we could do follow-on services in terms of interpreting. We help clients understand what the data means, and what they can do about it.

As that starts to move outside of our wheelhouse, there are many other firms out there that we could potentially hand over to them or join with as teaming partners. For example we might do so when it comes to analyzing the broader implications of macroeconomic analysis and geotechnical adaptation services, those sorts of follow-ons for after the climate knowledge we provide.

That pretty much describes the products we offer.

How about a green success story?

Here are several:

What would you do with a billion dollars? (Tahiti here I come?)

Ha ha, but that’s a real good point. Actually, I think I would share a fair portion of that with the small island states of the world to make their beaches more resilient to manifestations of climate change… and then maybe they could extend an invitation to me!

What do you see your industry looking like in in about 10 years?

Well sustainability is really starting to embed in a lot of different places in corporate culture where it wasn’t before. Even if it doesn’t go by the name of sustainability, it’s now almost synonymous with risk management. In the early years it would be blended in with communications and PR, but there are emerging concerns about greenwashing. To some extent sustainability is extended to other portions of corporate culture other than just the advertising component so as to materially demonstrate companies’ commitments to sustainability, which is blended not just with external global sustainability but with their own firms in their own right, in terms of having the social license to operate amidst a world that might hold them to account if they’re acting a little bit too out of bounds when it comes to the social good. We’ve seen that in some cases. Oil companies are starting to get taken to court on these matters, for instance.

We’re even seeing the emergence of ESG comptroller as a formal title in large organizations, people who are very much in the fiscal and accounting realm but married to sustainability KPIs when it comes to adaptation and physical climate risk analytics. This is going to really mature. I believe the World Economic Forum ran a global study of experts as to what the greatest risks of concern to emergent industries are over the next two years and over the next ten years. Artificial intelligence was number one, I believe, in the near term and it was among the top ones in the 10-year horizon, but what was persistent and growing over the 10-year term was actually sustainability. That pretty much ran the table for top concerns over the 10-year time horizon. Leading that is extreme weather and that’s because we’re now seeing the front foot of climate change and what that could look like with record-breaking activity month by month by month. So it’s here to stay and will very likely intensify. As the playing field for civilization itself starts changing that is going to remain a preeminent concern. That is industry agnostic and that affects all societies on earth.

Sustainability will then become, if it’s not already, very much embedded in the culture of examination for the corporate sector and for the civic sector. This will be the case not just in the realm of insurers regarding who foots the bill for all portions of any given climate hazard, but this will also be spread out in terms of who pays for what across society. That’s only going to intensify.

So it’s not just the insurers who have to worry about extreme weather. It’s going to be a much more mature sort of sector. I agree with Jay Koh from the Lightsmith group. I heard him on a podcast forecasting that in the next few years we’ll probably see our first billion dollar company in physical climate risk analytics emerge and it might not even be for the reasons that we think, it’ll be for some new and novel purpose and maybe even just equipping residents and homeowners and making that an everyday off-the-shelf product when it comes to knowledge of physical climate risk. We’re going to see some maturing companies in that arena.

What what do you want readers to take away from this article?

Well, clearly they should recognize the imperative behind knowing exposure to climate change. I believe I’ve communicated that well enough. I’d also like to focus on the idea that one can enter this sector without a whole catalog of back experience or background in it, because sustainability can touch on many different actions and many different job types that are out there. And the first thing to do is simply to start because I as I started my own consultancy, I barely knew what I was doing outside of the things that I already knew how to do in working with early stage tech startups. I had to learn quite a number of new skills that I hadn’t known before, but I didn’t need to employ any sort of regulatory or political acumen when it comes to examining these sectors. It’s different for starting an enterprise and a baby corporation, with all the sorts of considerations that go into that. I would encourage others that they don’t need to be experts to start.

How would you want people to get in touch with you or your organization?

Kudos

Many thanks to Matt Macunas and Weather Trade Net. Green Success Stories is happy to support and highlight your efforts! We invite you the reader to do the same.

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