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Infrastructure Investor published an interview with Rémy Estran-Fraioli, CEO of Scientific Climate Ratings, discussing the need for infrastructure investors and operators to assess climate risk through science-led ratings that prioritise financial materiality over policy targets, moving beyond generalist ESG ratings.
Key insights from the interview:
- The ESG backlash is growing, particularly in the US, as corporates and investors are “tired of ideologically loaded” scores that lack scientific and financial rigour.
- Infrastructure investors do not need another generalist ESG rating. They need to know, for example, the flood risk facing a specific airport or whether a power plant may lose value under transition policies: answers that blended ESG frameworks cannot provide.
- Investors need a clear view of the financial impact of climate change and the concrete actions that can be taken. Scientific Climate Ratings fills this gap by translating climate science into financially actionable metrics. Its Potential Climate Exposure Ratings (PCER) and Effective Climate Risk Ratings (ECRR) use scientific data and scenario analysis to assess forward-looking asset values, cash flows and resilience.
- The ratings go beyond “what if” scenarios or assumptions of an “extreme net zero world”. ECRR evaluates climate risk across a full range of physical and transition pathways, shifting the focus “from theoretical outcomes to financially likely outcomes“.
- The ratings are adjusted to reflect adaptation strategies, based on the EDHEC Climate Institute data, to quantify both the cost of inaction and the benefits of taking action.
Estran-Fraioli also noted key infrastructure trends: climate risk is highly granular and asset-specific; physical risk varies across infrastructure types (e.g., electricity grids and telecom networks are most exposed, with transport following); transition risk extends beyond direct emissions; and resilience can be a game-changer but adaptation measures are rarely factored into financial models. Scientific Climate Ratings shows how resilience alter risk profile.
Estran-Fraioli also highlighted that Scientific Climate Ratings’ first client was the World Bank, marking a milestone for the organisation:
“Using the ratings methodology, the World Bank was able to quantify the financial physical climate risk along with resilience strategies. The goal is to redirect funds to support projects where those resilience strategies are having the greatest impact.”
Read the full article.