T. Rowe Price Deploys Custom Climate Models to Shield $165 Billion Emerging-Market Portfolio from El Nino

T. Rowe Price has launched a climate-risk framework to insulate its $165 billion emerging-market portfolio from the expected fallout of an unusually strong El Nino. The initiative, sparked when the phenomenon began forming, relies on a custom model suite created by Johns Hopkins University researchers and merged with the firm’s econometric analyses. Aaron Gifford, who leads global sovereign research, said the approach allows the firm to gauge how shocks in one region ripple globally via a GVAR methodology and to factor sea-surface temperature data into scenario planning.

The strategy includes moderating positions in countries like Colombia, where drought-driven hydroelectric shortfalls could spur inflation, while watching for central-bank policy shifts. T. Rowe joins peers such as Man Group, Moreton Capital Partners and Robeco, which are also refining climate-adjusted investment tools and developing adaptation scores for MSCI indices. The broader goal is to anticipate food-price volatility, energy supply constraints, and fiscal pressures across vulnerable emerging economies.