Research and Innovation - Analytics

Research and Innovation – Analytics

EthiFinance Analytics is EthiFinance’s quantitative research and development (R&D) department.

EthiFinance Analytics is EthiFinance’s quantitative research and development (R&D) department. The R&D team is made up of research engineers specialized in various fields (data analysis, financial modeling, climatology and geosciences) divided into two areas of expertise:

These departments collaborate in synergies where non-financial and financial factors interact, in order to obtain quantitative solutions to the problem of double materiality.

EthiFinance Analytics engineers create, implement and disseminate models and methodologies linked to the assessment and management of financial and non-financial risks for financial institutions and companies. In addition to practical applications, Analytics actively contributes to scientific knowledge by presenting their results in articles published in academic journals and at scientific conferences. By combining their expertise, they then deliver robust tools and solutions to financial institutions and corporations, with regular academic peer review.

Our products and services

1. Environmental

2. Financial

Our environmental products and services

Environmental Services create models and solutions for companies and financial institutions that need to integrate environmental considerations into their risk and business management.

The products and services are listed in the table below.

Our financial products and services

Financial Services creates solutions for institutions to improve their financial risk management. As a financial services provider, we develop methodologies, models and products to be tailored to your needs through cooperation and co-construction with you and your team. This enables you to internalize the knowledge and tools, and strengthen team commitment to fully exploit these unique models tailored to your needs.

Client benefits

Consolidated environmental and financial solutions

Thanks to a multi-disciplinary team, we have been able to consolidate climate, environmental and financial models into a single framework: the indicators calculated on one side are used as impact or risk factors on the other. Since our approach is quantitative as long as no opinion is required, we can more easily connect these three universes together and obtain a quantitative double materiality.

Proprietary code

We develop all methodologies, models and implementations ourselves. In this way, we are not dependent on external models, and can adapt solutions to scientific developments and customer requirements. What’s more, because we are familiar with the intermediate stages, as well as the limitations and assumptions of climate-financial models, we can intervene in financial institutions at any stage in the development of in-house solutions.

Academic rigor

The Analytics team is made up of PhDs, for whom academic rigor is second nature. From understanding your needs to final formalization and implementation, we apply what we’ve learned from academic research. All our sufficiently innovative solutions, considered as interesting for scientific community, are published as academic papers in international journals and/or presented in academic congresses.

Possibility of in-house implementation

For financial institutions wishing to have their own in-house solution, we implement our models in your quantitative frameworks. Our source codes are modular and can be easily integrated into your in-house solution library. As a result, you will no longer be dependent on an external service provider and will be able to leverage our innovations in other projects.

Use Cases

Implementation of a physical risk analysis methodology

Portfolio scope

Global for physical assets (real estate, key physical assets of companies, infrastructure assets), and corporate and sovereign counterparts

Typical missions

In-house implementation of a physical risk assessment tool (mortgages portfolio, wholesale banking, business banking)

Development of a physical risk methodology for sovereigns

Support for subsidiary teams in this area

Training of the Group’s operational risk team

Production of educational and awareness-raising materials

Helped set up a climate risk mitigation plan

All models have been implemented at the client’s premises

Implementation of a climate stress test methodology (physical and transition)

Portfolio scope

Global for corporate counterparts, real estate assets

Typical missions

Development of two solutions for integrating climate transition risks into stress test modules

- A bottom-up solution based on the internal corporate rating model

- A top-down solution taking into account the modeling of the value chain between business sectors

Development of various transmission chains between climate risks and Natixis model inputs

All models have been implemented at the client’s premises

Implementation of tools to assess environmental risks

Portfolio scope

Global for corporate counterparts, real estate assets

Typical missions

Development of approaches to environmental issues:

- A “top-down” approach based on companies and sectors

- A “bottom-up” approach (based on site locations)

Implementation of a tool based on geographical location

Development of a methodology for assessing deforestation risk to limit reputational risk

Support in setting up a biodiversity transition plan

Development of a methodology for CSRD reporting on pollution, water, biodiversity and circular economy risks

All models have been implemented at the client’s premises

Climate VaR calculation for multi-asset investment portfolio

Portfolio scope

Global corporate, real estate, sovereign

Typical missions

Development of a set of climate VaR models that use a fully quantitative approach to estimate potential loss of value for equities, bonds (corporate, sovereign, convertible) and real estate.

Our models are fed by NGFS scenarios for transition and indirect physical risks (acute and chronic), and by risk maps projected on the basis of global warming scenarios for direct acute physical risks.

Each asset type has its own model, based on the characteristics of its issuer (e.g. sector, rating) and its particular features (e.g. VaR for bonds considers coupon rate, maturity, year to maturity, etc.).