We propose and implement a procedure to dynamically hedge climate change risk. We extract innovations from climate news series that we construct through textual analysis of newspapers. We then use a mimicking portfolio approach to build climate change hedge portfolios. We discipline the exercise by using third-party ESG scores of firms to model their climate risk exposures. We show that this approach yields parsimonious and industry-balanced portfolios that perform well in hedging innovations in climate news both in sample and out of sample. We discuss multiple directions for future research on financial approaches to managing climate risk.

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We propose and implement a procedure to dynamically hedge climate change risk. We extract innovations from climate news series that we construct through textual analysis of newspapers. We then use a mimicking portfolio approach to build climate change hedge portfolios. We discipline the exercise by using third-party ESG scores of firms to model their climate risk exposures. We show that this approach yields parsimonious and industry-balanced portfolios that perform well in hedging innovations in climate news both in sample and out of sample. We discuss multiple directions for future research on financial approaches to managing climate risk.

BackgroundProtein quantification is an essential step in many proteomics experiments. A number of labeling approaches have been proposed and adopted in mass spectrometry (MS) based relative quantification. The mTRAQ, one of the stable isotope labeling methods, is amine-specific and available in triplex format, so that the sample throughput could be doubled when compared with duplex reagents.Methods and resultsHere we propose a novel data analysis algorithm for peptide quantification in triplex mTRAQ experiments. It improved the accuracy of quantification in two features. First, it identified and separated triplex isotopic clusters of a peptide in each full MS scan. We designed a schematic model of triplex overlapping isotopic clusters, and separated triplex isotopic clusters by solving cubic equations, which are deduced from the schematic model. Second, it automatically determined the elution areas of peptides. Some peptides have similar atomic masses and elution times, so their elution areas can have overlaps. Our algorithm successfully identified the overlaps and found accurate elution areas. We validated our algorithm using standard protein mixture experiments.ConclusionsWe showed that our algorithm was able to accurately quantify peptides in triplex mTRAQ experiments. Its software implementation is compatible with Trans-Proteomic Pipeline (TPP), and thus enables high-throughput analysis of proteomics data.

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