Scientific Climate Ratings, a firm created by French business university EDHEC, has developed a system to estimate financial losses for infrastructure assets under various climate change scenarios. The firm’s CEO, Rémy Estran-Fraioli, noted that climate risks are accelerating, but most financial decisions overlook them. The ratings system will initially cover 6,000 assets, expanding to 5,000 listed equities in 2026. The methodology involves two stages: assessing an asset’s exposure to future climate risks and estimating the potential financial impact of climate scenarios from 2035 to 2050.
The firm found that 1,088 assets are expected to experience losses of at least 24% by 2035 and over 50% by 2050 if no action is taken. However, assets with the best ratings (A or B) account for only 2% of the expected loss, while those with the worst ratings (F and G) account for nearly 50% of the expected loss. The ratings aim to provide granular data to improve financial risk assessment and decision-making for investors and companies, highlighting the importance of considering climate risks in investment decisions. This is particularly crucial as trillions of dollars are invested in infrastructure vulnerable to extreme weather events.