Lenders’ Guide for Considering Climate Risk in Infrastructure Investments

Four Twenty Seven, in collaboration with Acclimatise and Climate Finance Advisers, published this guide to discuss the acute and chronic impacts of climate change on infrastructure, and the associated risks and liability for infrastructure investors. Once climate impacts and infrastructure resiliency are taken into account, loan and credit officers can structure lending that maximizes performance and minimizes risks. The guide includes ten “snapshots” or summaries of climate hazards and risks for the infrastructure sub-industries of: Airports; Marine Ports; Gas and Oil Transport and Storage; Power Transmission and Distribution; Wind-Based Power Distribution; Telecommunications; Data Centers; Commercial Real Estate; Healthcare; and Sport and Entertainment.

The report provides a framework for considering how potential climate hazards can impact key financial parameters, such as revenues, expenditures, assets, capital, and financing. The guide not only describes these negative impacts of climate, but also the potential opportunities that arise from resilience-oriented investments in infrastructure. As described further in the report, climate change may present opportunities in terms of “intensifying resource efficiency, diversifying energy sources, enhancing resiliency, as well as development of new products, technologies and services, and opening of new markets…”

The section Climate Risks and Opportunities: Sub-Sector Snapshots offers concrete examples on the potential impacts of physical climate-related risks and opportunities on various forms of infrastructure, including the key financial parameters impacted: Revenues, Cost expenditures, Assets, Liabilities, Capital and financing. 

Each snapshot includes:

  • a description of the sub-sector,
  • an estimation of its global potential market,
  • real life examples of observed impacts on specific assets, and
  • the potential financial impacts from six climate-related hazards (temperature, sea-level rise, precipitation and flood, storms, drought and water stress).

 

Publication Date: January 17, 2018

Related Organizations:

  • Four Twenty Seven

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Resource Types:

  • Planning guides

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