Category: IIGCC

Video: Introducing Acclimatise’s Special guidance report ‘Understanding Physical Climate Risks and Opportunities’

Video: Introducing Acclimatise’s Special guidance report ‘Understanding Physical Climate Risks and Opportunities’

Acclimatise’s special guidance report “Understanding Physical Climate Risks and Opportunities” is designed to help investors assess physical climate risk assessments to their portfolios.

Developed with the Institutional Investors Group on Climate Change (IIGCC), the guidance collates good practice for physical risk assessments across the stages of a typical risk assessment process. The guidance was published in June 2020. It was developed in close conjunction with IIGCC staff, leading investors, and Dr Rory Sullivan of Chronos Sustainability.

In this video, report author and Acclimatise consultant Robin Hamaker-Taylor talks through what the report covers.

Download the full guidance here.

Understanding Physical Climate Risks and Opportunities: New practical guidance for investors launched

Understanding Physical Climate Risks and Opportunities: New practical guidance for investors launched

By Robin Hamaker-Taylor

Acclimatise has led the development of a new guidance document on physical risk assessments for investors. Developed with the Institutional Investors Group on Climate Change (IIGCC), the guidance collates good practice for physical risk assessments across the stages of a typical risk assessment process. The Understanding Physical Climate Risks and Opportunities guidance was developed over the last year, in close conjunction with IIGCC staff, leading investors, and Dr Rory Sullivan of Chronos Sustainability.

Download the full guidance here

The guidance helps investors understand physical climate risks and how they are measured. It also provides investors with practical guidance on how they can begin to analyse, assess and manage the risks and opportunities presented by physical climate hazards.

Written specifically with investors in mind, the guidance can be used without prior climate expertise. Examples of how peers have conducted physical risk assessments and processes are included throughout, and investors are provided with 20 key questions to help them to plan their assessments or sense-check what they have already done.

Report author and Acclimatise consultant, Robin Hamaker-Taylor talks through what the report covers.

Why does physical climate risk matter to investors?

The Earth’s climate has already warmed by approximately 1.0°C above pre-industrial levels, according to the IPCC. Current trajectories show temperatures are expected to rise by 3.2°C by the end of the century, even if all current unconditional commitments under the Paris Agreement are implemented, according to the UN Environment Programme.

More frequent and more extreme weather and climate events, as well as gradual shifts in rainfall patterns, temperature, sea levels, sea ice and glacial retreat, are some of the changes already underway. Physical risks are here now and will continue to unfold, with financial implications throughout the investment chain.

Many asset owners and managers recognise climate change as one of the largest systemic risks to their investment portfolios. To date, however, relatively little attention has been paid to how institutional investors might assess and report on the physical risks and opportunities arising from climate change. This is despite a growing evidence base demonstrating the economic consequences of increasingly severe climate change.

“As a changing climate alters the fabric of economies, societies and environments across the world, it pays to be prepared,” said John Firth, CEO, Acclimatise. “The investors that can act now to both manage physical climate risks and grasp the opportunities to invest in resilience stand to be in the most secure position in the long-term. This guidance acts as a first step to achieving this.”

What does the report cover?

The newly published guidance will help investors to:

  • Better understand the investment implications – both risks and opportunities – resulting from the physical impacts of climate change.
  • Take practical steps to identify, assess and manage climate-related physical risks across their portfolios, through the approaches covered in the guidance.
  • Identify ways to invest in solutions that support greater resilience to climate change as well protecting investments from physical-climate related risks. Both approaches are key to strengthening broader societal adaptation to climate change.
  • Draw on additional available tools and data sources in identifying and assessing specific risks, and opportunities, across different asset classes.

The guidance document provides a comprehensive overview of physical climate risk assessment and management, including the following chapters:

  • Review of physical climate risks and how are they measured;
  • Chapters which follow the steps of a physical risk assessment:
    • Understanding the context
    • Setting the objectives and scope
    • Physical climate risk assessment variable selection (timescale, scenarios);
  • Analysis of physical climate risk-related opportunities; and
  • Monitoring, management and reportingof physical climate risks.

Download the guidance here


Upcoming IIGCC webinar launches new guidance on physical climate risks for investors

Upcoming IIGCC webinar launches new guidance on physical climate risks for investors

An upcoming webinar, led by the Institutional Investors Group on Climate Change (IIGCC) with Acclimatise and Chronos Sustainability, will launch guidance for investors to help them get started in understanding, assessing and managing physical climate-related risks. The webinar, ‘Understanding Physical Climate Risk for Investors’ will be held on May 26th 2020 at 14:00 BST/15:00 CEST/ 9:00 EDT.

As the impacts of climate change become more apparent, the physical risks by this new climate reality has significant implications for performance of investment portfolios. A changing climate is impacting portfolios now and can impair value over time. This places a growing urgency on the need for investors to understand, assess and report on physical-related climate risks and opportunities. Acclimatise led the development of the new guidance document, available immediately after the webinar, with input from Chronos Sustainability and IIGCC members and staff.

In this webinar, participants will hear from keynote speaker Emma Howard-Boyd, Chair of the Environment Agency, on the growing impacts from physical climate risks that investors need to manage. John Firth, CEO and Co-Founder of Acclimatise, will present the guidance developed for investors, outlining the key steps in a risk assessment and management process to help investors begin to understand and assess the risks to their portfolios. There will also be a panel discussion and Q&A with three investors who have taken steps to address physical risks and identify opportunities to demonstrate how investors can get stared and key issues to consider.

Register for the webinar here.

Visit the event website here.


Cover photo by Jeff Brown on Unsplash.
IIGCC moving ahead with investors’ guidance on physical climate risks and opportunities

IIGCC moving ahead with investors’ guidance on physical climate risks and opportunities

By Caroline Fouvet and Robin Hamaker-Taylor

During the first ever London Climate Action Week, members of the Institutional Investors Group on Climate Change (IIGCC) came together for a roundtable focusing on physical climate risks for investors. Part of a wider IIGCC initiative launched this spring, the roundtable aimed to support investors in their identification assessment and management of the physical risks associated with a changing climate.  Opportunities for investment in resilience have also emerged as an important part of physical climate risk management. The wider IIGCC initiative will produce a guidance document on understanding physical climate risks, due out this Autumn.

Facilitated by Acclimatise and Chronos Sustainability, the roundtable was a well-attended event, gathering a wide range of stakeholders from the investment industry, from infrastructure to impact investors. The event enabled participants to share insights into their progress to date on physical climate analysis and to discuss proposed guiding elements to undertake such work. Investors expressed the difficulty they faced to rely on current corporate disclosures, and how the guidance document could help them fill knowledge gaps regarding the key issues to consider when climate screening investments.

Five high-level messages on physical risk were presented by Acclimatise, which are crucial for investors to consider when looking at physical climate impacts. Among these, the team framed the difference between transition and physical-related risks as well as acute and chronic climate risks. Delving deeper, we stressed the need to look at previous impacts and the usefulness of conducting analysis that correlates weather and climate hazards with impacts on counterparties. This will be particularly useful for those looking to determine climate impacts over the next 10-20 year period, given the current locked-in levels of climate change. The need to design scenarios that consider a 4°C world was also highlighted, for those interested in assessing risks in the longer term. The discussion also included the importance of identifying climate-related thresholds for assets, and consideration of indirect climate effects at the macro-economic level, beyond damage to fixed assets.

The IIGCC guidance for investors on physical climate risks will be finalised this summer and undergo peer review from IIGCC members before its publication in autumn this year.


Cover photo by Jamie Street on Unsplash.
Investor initiative to produce new guidance on understanding physical climate risks

Investor initiative to produce new guidance on understanding physical climate risks

By Robin Hamaker-Taylor

The Institutional Investors Group on Climate Change (IIGCC) has launched a new project to develop guidance for investors on how they integrate the risks and opportunities presented by the physical risks of climate change in their investment research and decision-making processes.

The project will develop an IIGCC investor guide focusing on physical climate risk analysis with technical input from the specialist advisory firms Acclimatise and Chronos Sustainability, in collaboration with IIGCC members.

IIGCC is leading the initiative with the support of the Universities Superannuation Scheme (USS), one of the UK’s largest pension funds. Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change, explains: “In many ways, adaptation is the missing issue in the climate change debate. IIGCC’s new initiative will help investors to understand its importance and act on adaptation to climate change as an investment issue. This includes ensuring investors have the practical tools to account for the physical risks of climate change and are able to act on the opportunities found in addressing the issue, across both investment decisions and company engagement.”

David Russell, Head of Responsible Investment at USS, adds: “One of the key contributions of this project will be to focus on the risk posed by climate change across a range of asset classes. This will include sectors that are both dependent on access to water and other environmental resources, and those potentially impacted by a changing climate.”

The new guidance will include an introduction to the investment implications of physical climate hazards, and will collate information on tools and data sources needed to manage physical climate risks. Available later this summer, the guidance also aims to propose a process that investors can go through to identify, assess, manage and disclose climate-related physical risks and opportunities across their portfolios.

The United Nations Environment Programme has shown that the cost of necessary adaptation to climate change is between $140 to $300 billion per year across the global economy by 2030 alone, and point to a major gap in adaptation finance[. This offers potential new investment opportunities, in which investors can help build broader climate resilience, while also mitigating future losses otherwise incurred. This initiative will help investors better understand the nature of this opportunity.

The initiative is delivered as part of IIGCC’s ‘Investor Practices’ programme, which helps asset owners and managers better assess and manage both climate risk and opportunity, and to report on their actions more effectively.


Cover photo by Stephen Dawson on Unsplash.