Infrastructure assets are particularly susceptible to physical risks, which are influenced by factors such as location, design, and size. Both acute and chronic risks can inflict significant damage, exposing companies to direct financial impacts.

Our research reveals that transition risks could result in over USD 600 billion loss for infrastructure investments. Furthermore, physical risks have the potential to reduce the value of the most vulnerable portfolios by up to 50 percent.

The metrics used for the CRR are based on companies' enterprise value (EV), which reflects how transition, physical and macroeconomic risks affect their future cash flows and cost of capital. We also show how the impact splits between equity and debt holders and how it changes a company's probability of default. For this reason, we refer to it as a 'risk' rating rather than an 'exposure' rating.

Enterprise value is the value of a company's operations to all its capital providers, both equity and debt. Measuring climate impacts on enterprise value makes them comparable across companies with different financing structures. We then show how the impact is shared between equity and debt holders, and how it changes the company's probability of default.

We have chosen not to include insurance coverage in the CRR for a fundamental methodological reason: the mismatch between the short-term nature of insurance contracts and the long-term horizon of our ratings. The CRR estimates climate-adjusted expected returns over forward-looking timeframes, such as until 2035 and 2050, consistent with widely used climate scenarios. By contrast, insurance policies—whether for physical asset protection or business interruption—are typically annual contracts, subject to frequent changes in terms, coverage limits, and premiums. No insurance contract provides a credible guarantee of protection over the multi-decade period that matters for climate-adjusted financial assessments. Including such short-term, conditional instruments would, therefore, risk misrepresenting long-term climate resilience and introduce inconsistencies across rated entities. Furthermore, as climate-related risks escalate, insurability may diminish, especially in high-exposure sectors or geographies.

The CRR reports physical, transition and macroeconomic risks at two time horizons, 2035 and 2050, for all major climate scenarios. Our data exports go further, with results from 2030 to 2050 in 5-year steps. We calculate our risk metrics based on future macroeconomic outcomes (e.g., carbon emissions, socio-economic developments, and technological advances), influenced by climate change under various conditions. In the CRR, we weigh these scenarios according to their likelihood to capture the range of plausible futures and incorporate these insights into our risk assessment. We assessed the likelihood of climate scenarios based on the probability distribution of the aggressiveness of abatement speed. This probabilistic approach prevents reliance on extreme or overly simplistic assumptions and enables a more balanced evaluation of expected outcomes and tail risks. It allows for a systematic way to account for uncertainty in the speed and effectiveness of emissions abatement efforts, which is a major determinant of future climate and economic conditions. For more details on the methodology and calculations, please refer to our document on scenario probabilisation.

All our model results undergo rigorous validation to ensure their accuracy, including comparisons with past phenomena and real-time events, sector and company reports, and latest research and expert evaluations. Our methodologies are developed and continuously reviewed by leading academics, and we maintain full transparency by providing our model documentation and data sources.

• Reporting granular data: We offer climate-related, specific, and granular data for TCFD, ESRS, and IFRS S2 disclosures, including GHG emissions (all scopes), and physical and transition risk metrics in both monetary and relational terms.
• Monitoring future risks: Multiple climate scenarios with varying time horizons help monitor future physical and transition risks for sustainable business planning.
• Comprehensive climate analysis: Our ClimaTech database supports evaluating technology opportunities for decarbonisation and resilience strategies. These adaptation and mitigation measures allow us to adjust companies’ risk exposure accordingly.
• Financial risk evaluation: Transparent and robust materiality metrics, including the impact on enterprise value, its split between equity and debt, and the change in probability of default, allow for integration into financial risk management, credit analysis and valuations.

Beyond the risks a company faces directly, climate change also moves the economy around it. Under each climate scenario, interest rates and the cost of capital change by country and sector. The CRR captures this by repricing the company's future cash flows at the climate-adjusted discount rate. This macroeconomic impact is part of the total climate impact, alongside transition and physical risks.