Physical Climate Risk
Welcome to INREV’s paper series on physical climate risk providing a practical guide to help investors, investment managers and service providers navigate the assessment of physical climate risks at both asset and portfolio levels. From rising temperatures and flooding to storms and water stress, climate-related hazards are shaping investment decisions, asset performance and long-term value. As regulatory expectations increase and investors hone in on sustainability, the need for a consistent, practical approach to assessing and managing these risks has never been clearer.
Data flows and transparency of physical climate risk in real estate
This second paper of the Physical Climate Risk series focuses on mapping how data flows between key stakeholders and identifying the information needed to support more consistent approaches to physical climate risk assessment.
Highlights include:
- Greater transparency around data inputs, methodologies and outputs can improve comparability across investors, managers, lenders and service providers
- Physical climate risk assessments are increasingly used beyond regulatory reporting to support investment decisions, asset management and investor reporting
- Investor expectations vary, from high-level validation to detailed asset-level analysis and quantitative risk metrics
- Outcomes vary significantly depending on assumptions such as climate scenarios, time horizons and hazard definitions
- Data flows between multiple stakeholders, underlining the need for clearer structure and alignment
- Good practice data requirements are outlined to support more consistent and comparable assessments
