The Institutional Investors Group on Climate Change (IIGCC) has released a new discussion paper, ‘Physical Climate Risk Divergence: PCRAM for Investors’, providing a roadmap for integrating the Physical Climate Risk Assessment Methodology (PCRAM) into investors’ existing processes.
The paper explores practical applications of PCRAM across various stages of investment, including portfolio design, project origination, due diligence, credit and investment committee approvals, stewardship, and risk management. It also highlights how real estate and infrastructure investors can adapt PCRAM methodology, subject to their own due diligence, to enhance their investment strategies.
Moving beyond traditional risk management, the discussion highlights the potential of PCRAM to drive value creation through resilience-focused investments. This publication builds on IIGCC’s August 2024 report, ‘PCRAM in Practice’, which featured case studies showcasing the methodology’s effectiveness in assessing physical climate risks at the asset level.
Developed in collaboration with IIGCC members as part of the Adaptation and Resilience Working Group, the paper aims to promote standardisation of physical climate risk assessments, lay the groundwork for the Climate Resilience Investment Framework (CRIF), and highlight investment opportunities in climate resilience initiatives.
The paper seeks to equip investors with actionable insights to address physical climate risks while uncovering opportunities for sustainable value creation.
