ClimaTech: A Research-driven Knowledge Base on Efficient Climate Risk Reduction Strategies

• Climate risk is not limited to exposure for long-term investments, due to its potential to jeopardize the resilience and value of infrastructure assets.
• It is essential to incorporate resilience and decarbonization strategies for accurate and decision-useful climate risk assessments. However, traditional assessments do not account for the measures that have been taken or will be implemented to manage both physical and transition risks.
• The ClimaTech project, the largest global repository of decarbonization and physical risk reduction strategies, provides evidence-based, comparable insights covering 103 strategies, 100+ infrastructure asset subclasses and eight sectors, resulting in the assessment of 1,800+ strategies.
• Scientific Climate Ratings leverages ClimaTech to adjust its ratings for company-specific strategies, provide financial insights on the true, current state of the asset value, and facilitate informed investment decisions.

Climate change poses significant risks for long-term investments, as physical risks arising from extreme weather events and transition risks associated with a shift to a low-carbon economy have material impacts on financial stability and asset valuation. It is essential to assess and quantify these risks with evidence-based tools and incorporate adaptation measures to navigate their financial consequences, while complying with climate reporting requirements and regulations. 

While current climate risk assessment models provide valuable tools to support these efforts, a significant gap remains. Most traditional analyses focus purely on exposure scores without quantifying the financial materiality of such risks and do not provide standardized, comparable and sector-specific tools that account for not only the vulnerability of assets, but also the decarbonization strategies and physical risk mitigation plans. They also do not assess or reflect the usefulness or effectiveness of these strategies and their real-life implementation. 

The ClimaTech project (see executive brief here) was developed by the EDHEC Climate Institute to address this gap, and provide a structured, comprehensive framework that compiles company-specific strategies across 101 infrastructure types, resulting in more than 1,800 decarbonization and resilience strategy assessments (see Figure 1). 

Scientific Climate Ratings leverages this framework to adjust its climate risk ratings for strategies that are or will be implemented, by re-evaluating exposure and its financial impact. As a result, the ratings extend beyond theoretical assumptions to reflect the true state of the asset, generate accurate financial insights, and enable better-informed investment decisions.

ACCOUNTING FOR CLIMATE MITIGATION STRATEGIES AND TECHNOLOGIES 

The pressure arising from accelerating climate risks is beyond theoretical or ethical for institutional investors or limited to long-term financial consequences. Research by the EDHEC Infrastructure & Private Assets Institute (EIPA) indicates that these risks are already material for several pension funds with significant exposure to infrastructure assets, which are highly vulnerable to intensifying weather extremes such as floods. According to EDHEC infraMetrics data, up to 54% of global infrastructure value may be at risk from such physical risks in the “Hot House” scenario. 

Despite the increasing recognition of these risks and their impact on asset values, most investors lack comprehensive, asset-level climate risk assessments based on sector-specific analysis, or guidance on how to mitigate climate vulnerabilities. Moreover, there are no comprehensive tools that link infrastructure type and exposure to the most effective strategies for reducing risk. As a result, decision-makers cannot access the detailed, asset-specific insights they need to take meaningful action.

There is also a striking lack of reliable data and information from companies to assess whether they are effectively managing these risks. A recent investigation by the EDHEC Climate Institute into the sustainability disclosures of up to 50 major companies with infrastructure assets showed that fewer than a third disclosed asset-specific GHG emissions data or provided actionable plans on how to meet emissions reduction targets. Even fewer evaluated the vulnerability of their assets or reported on their climate resilience.

CLIMATECH: A COMPREHENSIVE FRAMEWORK IDENTIFYING MOST IMPACTFUL RISK-REDUCTION STRATEGIES 

Backed by two years of applied research and nine peer-reviewed publications, the ClimaTech Project aims to address these limitations by establishing a comprehensive and evidence-based framework. ClimaTech is the largest global repository of decarbonization and resilience measures tailored for infrastructure. Its database includes a listing of the most effective strategies and technologies, accompanied by expert analysis and quantified indicators: 

• 103 strategies covering both transition (Scopes 1, 2, and 3) and physical climate risks (including floods, storms, heat, and wildfires), linking them to 101 subclasses.
• Classifies infrastructure assets into eight industrial superclasses, comprising various sectors, including conventional power, transport, networked utilities, data, renewables, water infrastructure, environmental services, and social infrastructure.
• Assesses each strategy for its relevance, effectiveness, key enabling technologies, and protection levels offered by physical risk reduction strategies in terms of return periods, resulting in over 1,800 evaluated applications. 

ClimaTech leverages this extensive coverage and analysis to facilitate the integration of engineering and design strategies, by also offering a critical view of their effectiveness. These processes are supported by a comprehensive and comparable database that draws insights from more than 200 academic papers, technical documents, and government reports. 

ClimaTech is built on a scientifically rigorous, topdown methodology that translates climate research into actionable insights. It begins with a comprehensive review of the scientific and technical literature to identify the most impactful current and emerging decarbonization and resilience strategies, along with the enabling technologies required for their implementation. 

For decarbonization, the framework identifies effective strategies targeting Scope 1, 2, and 3 emissions, evaluates the technologies that enable them, and estimates their potential to reduce emissions in practical, sector-specific contexts. For resilience, it assesses strategies designed to reduce physical climate risks, and quantifies their typical level of protection, expressed through metrics such as return periods or performance thresholds relevant to each hazard type. 

To ensure scientific robustness and relevance to investors, the research outputs undergo validation by a Review Committee of experts from academia, infrastructure investing, sovereign wealth funds, consulting, regulation, and the private sector. 

Infrastructure types are categorized according to the Infrastructure Company Classification Standard TICCS®, a widely recognized taxonomy that enables consistent analysis of infrastructure assets across sectors and geographies. 

RATING CLIMATE RISK BEYOND EXPOSURE: REFLECTING ADAPTATION FOR INFORMED INVESTMENT DECISIONS

Scientific Climate Ratings draws on this structured, evidence-based framework, empowering stakeholders to understand asset-specific climate risks in a systematic and actionable way, thereby bridging the gap between climate science and financial insights. Our ratings utilize the provided indicators of ClimaTech on the effectiveness of strategies to re-evaluate exposure to climate risks and their financial impact, and to adjust its two complementary ratings:

The Climate Exposure Rating (CER) and the Climate Risk Rating (CRR). 

By using ClimaTech as a foundation, the first step is to conduct a consistent and science-based assessment of climate risk across asset types. What makes our approach more reflective of reality is that we do not stop there. Our ratings are adjusted to reflect the strategies that have actually been implemented or are going to be implemented. This means that an asset is not judged purely on exposure, but also on the measures taken to mitigate that exposure (see Figure 2 for an example, acess From Greenwashing to Measurable Impact: Highlights from the ClimaTech Webinar here). 

The adjustment of ratings for these strategies is critical because most infrastructure assets are already built and functioning. Simply identifying the risk is not sufficient; what matters is whether the asset has taken credible steps to reduce it, and to what extent. By accounting for this, our ratings go beyond theoretical vulnerability and aim to reflect the true, current state of the asset, enabling more meaningful comparisons and better-informed investment decisions. 

By bridging the gap between climate science and financial insights and making its database available as an open-access platform, ClimaTech empowers investors with the tools for more transparent assessments, supporting resilient infrastructure portfolios. 

In a world where climate change presents material risks for infrastructure, traditional and generic analyses mostly lack the focus and data needed to assess localized vulnerabilities. The ClimaTech project offers a transformative solution by compiling over 1,800 decarbonization and resilience strategy assessments across 101 infrastructure types. enabling accurate climate risk assessments and actionable knowledge.

Scientific Climate Ratings leverages this powerful tool to adjust its climate risk ratings and to reflect the real-world impact of implemented strategies. This innovative approach ensures that an asset is judged not just on its vulnerability, but on the credible steps taken to reduce it. As a result, our ratings empower investors with accurate, decision-useful insights to build more resilient portfolios.