Mott MacDonald launches new tool for investment in climate resilience

07 October 2022 3 min. read
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In collaboration with the Coalition for Climate Resilient Investment, engineering consultancy Mott MacDonald has helped roll out a new programme which rewards the financing of climate resilience. The Physical Climate Risk Assessment Methodology will help climate start-ups more clearly demonstrate positive returns on investments.

Even in an ideal world where net zero occurred tomorrow, the likelihood is the impacts of climate change so far would not reverse – so learning to live with those changes will be essential to how businesses operate. But when it comes to tackling the impacts of climate change, investing in new ways to adapt to it lags behind the financing of climate mitigation. According to the Climate Policy Initiative (CPI), total spending on climate finance during 2019-2020 reached $632 billion, with mitigation finance accounting for $571 billion compared to just $46 billion on adaptation and resilience; significantly less than what is required to meet the challenges posed by climate change, according to the CPI.

The Coalition for Climate Resilient Investment (CCRI) currently comprises 125 institutions, including institutional investors, banks, rating agencies, engineering firms and insurance companies, representing US$25tn of financial assets, as well as the governments of the UK, Jamaica and the State of California. The coalition looks to develop and pilots practical tools, solutions and financial instruments to support a more efficient integration of physical climate risks in investment decision-making.

Carlos Sanchez and Denise Bower

The latest of these comes in collaboration with global consultancy Mott MacDonald. According to a release from the firms, the pioneering Physical Climate Risk Assessment Methodology (PCRAM) is the first tool of its kind, in that it enables asset owners and investors to accurately understand the exposure of critical infrastructure to climate risks.

Denise Bower, Executive Director at Mott MacDonald, said, “We set out to create a framework that enable public and private sector infrastructure investors to assess their exposure to climate physical risks, quantify this exposure and improve their asset performance. What we found is that investing in resilience leads to better outcomes, better performance, less downtime, less maintenance and, most importantly, fewer negative impacts on the communities that infrastructure serves.”

Designed to enhance the financial valuation of investments, instead of minimising losses, PCRAM supplies infrastructure owners and operators with the means to evaluate physical climate risks to infrastructure and analyse their long-term impact on asset performance. This capability ensures climate risk assessment is integral to adapting infrastructure assets, leading to significant reductions in the cost of future climate adaptation measures and improvement in the quality of revenue streams.

Carlos Sanchez, Executive Director, Coalition for Climate Resilient Investment, added, “CCRI delivers rigorous analytical solutions that clearly demonstrate resilient investments are good investments. Strong market forces are pushing the industry towards improved enforcement and reward of these integration practices, translating into opportunities for those that take early action. CCRI analytics offer the potential to drive a more efficient allocation of capital towards climate resilient investments, without which we are unlikely to future-proof our communities for the decades ahead.”