Evidence of the financial materiality of physical climate risk continues to mount as extreme weather events become more frequent and severe, noted investors, lenders, insurers and others throughout the week. An analysis published by MSCI, for example, found that physical climate risk is increasingly reflected in credit markets, where investors have demanded higher returns from companies more exposed to hurricanes, and that physical risk is associated with weaker profitability.
The research suggests that understanding the exposure of portfolios or loan books to physical hazards starts with location. Following MSCI’s agreement to acquire First Street, a leading provider of physics-based climate risk data and analytics for every property in the world, MSCI clients will gain access to more granular, asset-level assessments of physical climate risk.
The week’s heatwave illustrated…
