A recent paper by Nest, UBS Asset Management, and the University of Oxford highlights the need for investors to better integrate physical climate risk into their strategies due to the “limited, incomplete and inadequate” corporate disclosures on physical risks. The report notes that climate change is already causing significant economic damage and that carbon emissions and land-use change continue to worsen the physical risk. The study argues that third-party data providers should improve the clarity and consistency of analytical models and data on physical risk events, and that listed companies should provide granular, location-specific information on physical risks, including insurance availability, asset geolocations, and past and potential future risks. The researchers recommend that regulators and capital markets adopt uniform frameworks for integrating climate risk data into financial decision-making, and that investors engage with companies to encourage improved climate risk disclosure and adaptation efforts. The paper warns that without improved data and clearer methodologies, investors risk misallocating capital and failing to protect their portfolios from climate-induced disruptions.
Amid mounting climate concerns, investors demand more transparent and accurate physical risk data.
