From risk to opportunity: Two new resources to help investors address physical climate risks

IIGCC has published two adaptation and resilience resources this year to support investor action on physical climate risk: the Climate Resilience Investment Framework (CRIF) and the Physical Climate Risk Appraisal Methodology (PCRAM 2.0). We look at how these resources complement one another to support investor climate resilience and adaptation strategies.   

Physical climate risk is a topic of growing importance for investors as global average temperatures rise. Estimates vary, but there is a clear consensus that the likelihood of more frequent and extreme climate events poses material risks to investment portfolios. 

Reflecting on investor sentiment at London Climate Action Week and throughout 2025, IIGCC CEO Stephanie Pfeifer highlighted that “physical climate risk is now front and centre”, requiring a dual track approach alongside mitigation.  

In support, we published two resources to support our members and the wider community: the Climate Resilience Investment Framework (CRIF) and Physical Climate Risk Appraisal Methodology (PCRAM 2.0). 

Both resources are designed with interoperability in mind. We outline the purpose behind each and their potential benefits for investors. 

Using both tools to understand the true costs of climate change 

Today’s enabling environment inhibits the pricing of physical climate risks into asset valuations, obscuring the true costs of climate change. 

Considering this challenge at the portfolio level, CRIF is an investor-specific resource to help develop individual climate adaptation and resilience (A&R) plans. It supports investors to establish appropriate internal governance, objectives, and asset allocation. CRIF can then help investors to devise strategies and plans to address physical climate risk through the investment process, policy advocacy, as well as stakeholder and market engagement. 

Currently, CRIF offers specific asset class guidance for real estate and infrastructure, with updates planned in the near term to include sovereign, sub-sovereign, and corporate assets (listed equities and corporate fixed income). You can learn more about CRIF, its objectives, use cases in our explainer.   

Recognising that assets often experience physical climate risk within the context in which they operate, CRIF's target setting is at the asset level and process-based, rather than outcomes-based. This target setting methodology is underpinned by PCRAM.  

Informed by investor assets real world case studies, PCRAM supports investors to identify physical climate risks, understand their materiality, explore adaptation options to financially material risks, and analyse the best way forward for decision making.   

PCRAM offers a practical guide for understanding and managing the physical climate risks that climate change poses to real assets. It supports stakeholders in making better decisions by factoring in physical climate risks and identifies opportunities to make more resilient, future-proof investments. We shed more light on PCRAM 2.0, its evolution, and real-life case studies in our summary. 

➡️You can also check out our latest PCRAM case study, which highlights its application in analysing solar and mini-hydro portfolios. 

How do CRIF and PCRAM work together? 

PCRAM 2.0 is based on the principle of proportionality, encouraging investors to make climate-informed investment decisions to the maximum practical extent possible. It also acknowledges that certain factors – such as data quality, ownership structures and more – may prevent the implementation of adaptation options. 

This understanding is echoed in CRIF. The framework promotes a cyclical process, to be revisited regularly as sources of understanding develop – be that better data or tools, shifting hazards, or key points in the financing cycle.  
 
The table below shows how PCRAM 2.0 and CRIF work together. CRIF acts as a roadmap, with various stages of alignment to reflect the maturity of adaptation and resilience actions. PCRAM 2.0 provides the practical steps, guiding investors through each stage – from assessing risks to taking action on adaptation and resilience. 

Moving from risk to opportunity 

Investors are not alone in recognising this growing importance. Adaptation and resilience is no longer sidelined in international negotiations. According to the incoming COP30 Presidency, with A&R to be a major focus at COP30 in Belem this year.    

At IIGCC, we intend to shift the narrative from purely risk to one that also recognises opportunity. The economic case is clear. The financial case is generally understood to be positive when enabled by the correct incentives and rewards, which to date have not always aligned. Unlocking this potential for institutional investors and demonstrating the link between systems-level resilience and asset-level value will be key to our work in the months ahead.  

CRIF and PCRAM will play a vital role throughout.    

The Insight was written with contributions from Anne Chataigné.

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