Scientific Climate Ratings (SCR), an EDHEC venture, featured in an article by International Financial Review (IFR) magazine, promoting the agency’s powerful feature assigning a precise dollar value to the impact of climate risk on infrastructure.

SCR offers forward-looking ratings that quantify how transition risks (linked to the shift to a low carbon economy) and physical risks (floods, storms, heatwaves and wildfires) affect financial value of assets.

Key insights from the article authored by Tessa Walsh:

• Scientific Climate Ratings (SCR) data reveal significant climate risk vulnerabilities across infrastructure sectors.
• Network utilities face the highest exposure with an expected 41% Net Asset Value (NAV) loss, primarily due to storms and floods impacting assets like electricity grids and water networks.
• Transport infrastructure shows a 17% risk, largely from wildfires and floods, affecting assets such as roads, railways, and airports often located in vulnerable coastal or forested areas.
• Social infrastructure (e.g., schools, hospitals) appears relatively protected with a 7% risk, reflecting lower exposure to physical hazards and transition pressure.

CEO of SCR, Rémy Estran-Fraioli, told IFR:

“We think that there is a critical disconnect, because physical risk and climate risk in general are accelerating, but they are generally poorly assessed as vague, non-financial concerns. We are trying to go beyond ESG ratings and translate exposure to climate risk into concrete monetary terms.

“We can price the value of an adaptation strategy and that’s very important because resilience can be a game-changer and that’s also something that investors want to see. Asset-specific vulnerability can be lowered through the use of adaptation strategies.”