ICCA report: Institutional Investors find Alpha in Climate Risk Matrices

Thursday, December 10, 2020

The Climate Risk Matrix, developed by the Intact Centre, is a tool that institutional investors can use to identify material physical risks that investee companies face from climate-related extreme weather events.

cover of report with the same title as headlineLed by the Intact Centre on Climate Adaptation in the Faculty of Environment, the Global Risk Institute and Stanford Global Projects Center (Stanford University), a global survey of institutional investors managing $2-trillion (U.S.) identified a need for concise and interpretable information regarding risks portfolios face from physical climate change. In response, many of these investors are looking to a new risk-assessment tool, the Climate Risk Matrix (CRM).

The CRM, developed by the Intact Centre, is a tool that institutional investors can use to identify material physical risks that investee companies face from climate-related extreme weather events. 

Globally, the Task Force on Climate-Related Financial Disclosures (TCFD), central banks and financial regulators warn that climate change threatens the stability of financial markets, and they advise that mandatory disclosure of climate-related risks is on the horizon. They are calling for a global, standardized method to assess such risks.

As highlighted by Sonia Baxendale, President and CEO of the Global Risk Institute, “Climate change is a risk, not only to our environment but to the long-term stability of our economy and global financial system. Investors need to understand the physical and transition risks that climate poses to their portfolio companies.”

Read the full story here.

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