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An overwhelming majority of investors consider that climate risk will have a highly significant impact on their infrastructure investment but say that they do not know how to measure this risk and therefore manage it
EDHEC Infrastructure & Private Assets Research Institute has announced the results of its latest survey, entitled “Physical climate risk survey: those in the infrastructure investment industry are concerned and lack data.” The survey, conducted among investors and industry professionals following a presentation of EDHEC Infrastructure & Private Assets Research Institute's recent research paper “It’s Getting Physical”, revealed significant apprehensions and knowledge gaps among respondents. Concerned investors emphasised the urgent need for better data and information regarding physical climate risks in infrastructure investments.
Key findings from the survey, which polled 70 investment industry professionals including managers with over USD 2 trillion under management, provided the following insights:
- 97% of investors polled believe that physical climate risk is significant.
- 76% anticipate a medium or high impact of climate risk on their infrastructure investments.
- Only 16% believe that there is adequate understanding of how physical climate risk will affect infrastructure assets.
- 76% of respondents find existing climate scenarios inadequate for assessing physical climate risk in infrastructure investments.
- 66% of respondents had not conducted any evaluation of physical climate risk themselves.
Importantly, the survey confirms that despite the recognised importance of physical climate risk, investors and managers lack sufficient tools and knowledge to assess its impact on their portfolios effectively.
"The survey's findings underscore the critical need for better understanding and management of physical climate risk in infrastructure investments. Despite the high stakes, there is a clear gap between the perceived significance of climate risk and the ability to evaluate and mitigate its impact effectively," said Frédéric Blanc-Brude, Director of the EDHEC Infrastructure & Private Assets Research Institute.
The survey underscores the importance of incorporating robust risk assessment frameworks and climate scenarios into infrastructure investment strategies to address the evolving challenges posed by climate change.
The survey can be accessed here:
