This guidance provides a comprehensive entrance point for investors who want to make a start on assessing, managing and reporting on physical climate risks in their portfolios. It targets both asset owners and asset managers, and its aims are twofold:
1. To help investors understand physical climate risks and how they are measured. This guidance provides an overview of the physical climate science and clearly illustrates how physical risks are manifesting and causing financial consequences. This helps to further raise the awareness of asset owners and managers, including both investment decision makers and Environmental, Social and Governance (ESG) staff, and establishes motivation to conduct physical risk and opportunity analysis.
2. To provide investors with practical guidance on how they can begin to analyse, assess and manage the risks and opportunities presented by physical climate hazards (i.e. acute and chronic). This allows investors to understand the wide range of considerations they will need to make, where they can source information, tools and data, and how to tailor the assessment to their needs.
This comprehensive guidance document is complemented by an additional summary document for asset owners and asset managers outlining five practical steps to start identifying, assessing, monitoring and managing physical climate risks. The summary document offers an entrance point for investors who want to begin assessing, managing and reporting on physical climate risks in their portfolios.