Integrating Climate Risk Management Across Infrastructure and Real Estate Assets

Integrating Climate Risk Management Across Infrastructure and Real Estate Assets

The Global Infrastructure Initiative by McKinsey & Company “Integrating climate risk management across infrastructure and real estate assets” highlights how climate-related risks are increasing for infrastructure and real estate assets.

Recent research by the McKinsey Global Institute warns that “…physical risks may increase the operating costs and climate-related damages of some assets by as much as 10 times, indicating the potential for significant variations in asset values.”

Accordingly, stakeholders must incorporate climate intelligence when selecting, underwriting, constructing, operating, and maintaining assets. Here are eight key themes, based on discussions with leaders from across the value chain:

  1. Engage in a climate strategy for your assets now.
  2. Prepare for increasing physical and transition risks.
  3. Financing climate-ready infrastructure will require public-private coordination, robust data, and innovation.
  4. Decarbonize, manage risks and capture the opportunities.
  5. Tackle the barriers to integrating climate risk into assets.
  6. Seize the opportunities to accelerate climate-ready infrastructure.
  7. Prioritize action where it makes long-term sense.
  8. Integrate climate risk evaluation throughout the asset project lifecycle.

© 2021 McKinsey & Company.

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