TOKYO -- Tokio Marine and Nichido Fire Insurance will launch as early as fiscal 2022 a service that calculates the financial risks companies could face from environmental regulations abroad, helping businesses better plan their strategies amid a growing global push to fight climate change.

While there already are services that predict losses from floods and other natural disasters triggered by climate change, one that accounts for government regulation is rare. The Japanese insurer will partner with Risilience, a British risk assessment firm specializing in climate change, on the endeavor.

Clients will be able to instantaneously ascertain the potential financial hit from building a new factory or office in a particular country or region by plugging in factors like output capacity, floor space and suppliers. The model will account for changes in specific local policies, like a new carbon tax or an end to fossil fuel subsidies.

For example, the model may predict a $500 million hit to a company's profits over five years from a carbon tax and new rules on carbon trading.

In addition, the service can also predict how environmental boycotts and other issues could squeeze sales.

The effort will make several calculations based on different scenarios, such as if the target country makes no decarbonization efforts over the next five years, or if it sticks to goals set under the 2015 Paris climate agreement. Client companies can compare the figures in order to plot their best course of action.

Demand for such forecasts is expected to grow as companies face increasing pressure to disclose climate-related information. The Task Force on Climate-related Financial Disclosure, an international body established by the Financial Stability Board that monitors the global financial system, recommends that companies disclose their plans for decarbonization. Japan is expected to essentially require some publicly traded companies to analyze and disclose climate-related risks starting this spring.

Tokio Marine has recently taken a stake in Risilience, which was established in 2016 by a team of experts at Cambridge University, who were studying potential risks that could arise during the transition to a low-emissions society. It calculates the likelihood of various risk scenarios, as well as their potential impact on corporate profits and valuations.