Assured Guaranty Ltd, the bond insurer based in Bermuda, and California-headquartered UrbanFootprint, the urban intelligence provider, have announced their plans to deliver an industry-leading data-centric approach to ESG analysis for the municipal bond market.

Municipal Bond Insights is a purpose-built tool designed to drive seamless evaluation of municipal bond prospects for climate and community vulnerability risk in the interest of minimising portfolio-wide exposure and risk across an entire sector or large territory, and facilitating ESG analyses.

As the damaging effects of climate change continue to intensify, public finance investors are increasingly scrutinising how rising threats such as extreme weather events contribute to risk levels and potential defaults.

In 2021 alone, the US suffered a combined $145 billion in damages due to 20 natural disasters.

Assured Guaranty has been leveraging UrbanFootprint’s data insights for over a year in its financial guaranty business to evaluate municipal bond risk based on climate metrics, to support both single credit and portfolio-wide analysis and is working with UrbanFootprint to further develop UrbanFootprint’s products and make them available to the municipal bond industry.

Dominic Frederico, president and CEO of Assured Guaranty, said: “Municipal Bond Insights is designed to standardise and streamline ESG risk assessment based on UrbanFootprint’s methodology, which we have used for more than a year to evaluate obligors’ climate risks among the thousands of obligors in our portfolio of insured bonds.

“The ability to integrate climate and community vulnerability data will help to ensure that we are prepared to manage risk from these growing threats, and we look forward to communicating the benefits of this product to the many municipal bond professionals we work with every day.”

UrbanFootprint’s Municipal Bond Insights is a dynamic data-driven tool that analyses climate and community risk and resilience for the public finance industry.

By combining current economic, socio-demographic, and community-scale data with climate and natural-hazard data, including risk of fire, flood, heat waves, sea level rise, and storm surge, Municipal Bond Insights provides public finance companies with a deep and actionable understanding of risk into individual assets and across portfolios and helps improve risk-adjusted returns.

Municipal Bond Insights provides contemporaneous insights to evaluate, rank and compare opportunities based on a composite, nationwide score of ESG risks for any asset or municipality, measuring the potential impacts of natural disasters and man-made hazards on communities, resources, and infrastructure.

Joe DiStefano, UrbanFootprint CEO, said: “As climate change continues to accelerate the severity and regularity of extreme weather events, public finance institutions are seeking solutions to include climate and community resilience metrics in risk assessment for their portfolios.

“Municipal Bond Insights combines Assured Guaranty’s municipal market expertise with our comprehensive data platform and decades of experience in urban planning and disaster response to bring a unique approach to data-driven ESG analysis.”