Financial institutions (FIs) are increasingly exposed to climate liability risk (CLR), both directly and indirectly. Direct CLR arises from the risk of legal or regulatory action against the FI itself due to climate-related activities. Indirect CLR stems from the exposure to portfolio companies or other entities that may face climate-related legal challenges


MDY Legal and Cariad Climate have jointly developed a methodology to enable FIs to assess climate liability risk (CLR). This approach would empower FIs to proactively identify, evaluate, and manage - or mitigate - CLR while also ensuring transparency in climate-related matters.


Recognising the limitations of their spreadsheet-based methodology, MDY Legal and Cariad Climate sought to create a more accessible online tool to streamline the assessment process for FIs, thereby making it easier to apply the developed methodology. We were contracted to initiate the process of converting this existing risk-based methodology into a user-friendly and visually engaging online tool. 


Process

The project was funded by Innovate UK through its Business Growth initiative and involved several strands of work:

•    Existing methodology review: Our consultants analysed the client’s spreadsheet approach and evaluated the current set of climate indictors and the CLR scoring mechanism.

•    Visualisation: Based on this review, and in conversation with the clients, we developed a variety of data visualisations to demonstrate different ways the assessment results could be displayed.

•    User experience / User interface: Our UX designers defined detailed “activities” and produced wireframes to describe the user interface and experience. 

•    System requirements and architecture: In collaboration with the client, our software developers established a comprehensive set of system requirements, including a detailed system architecture, to guide the development of the prototype CLR online tool.


Solution

By the end of the project, we successfully delivered the essential components for the development of the online CLR tool, tailored to the client’s needs: 

1) intuitive visualisations to effectively communicate assessment results; 

2) a clear definition of user roles and how each role would interact with the tool (user interface/ user experience); 

3) a comprehensive framework for the tool’s development (system requirements and architecture).

Impact

Although it was beyond the scope of the project to develop the final tool, our technical contributions provided a solid foundation for future development efforts ensuring the tool aligns with end-user expectations. The deliverables from this project offered significant value to our clients, including:


•    Clarifying scope: Providing a clear understanding of the requirements and scope for the online tool.

•    Informing development: Establishing a strong foundation for future development efforts.

•    Identifying gaps: Offering inspiration and thought-provoking insights to build on the methodology.


Rachel Child, Cariad - “I was very impressed by how quickly the IEA team understood our requirements for the tool and translated our methodology into a user-friendly and accessible online tool design.”  

 

Diane Harris, MDY Legal - “The IEA team were great to work with and very patient with us as we went up the on-line tool learning curve - they clearly understood what we were trying to achieve and have provided us with a very user-friendly tool design.”

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