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Physical Climate Risk Appraisal Methodology

The Physical Climate Risk Appraisal Methodology (PCRAM) gives investors a systematic, objective, and replicable roadmap to integrate physical climate risks into their individual investment strategies.

CRIF provides a summary of what could be considered relevant action points within an investor adaptation and resilience plan. It currently focuses on potential actions that supports investors to:

Flagship tools and framework

Develop internal structures, policies, and processes that facilitate portfolio alignment to occur.

Measure and Benchmark

Encourage investment assets to improve their management of material physical climate risks.

Investor voice

Advocate for an enabling external environment for portfolio alignment to occur through systems stewardship.

What is PCRAM?

The Physical Climate Risk Appraisal Methodology (PCRAM) is an investor‑led methodology designed to support investors seeking to systematically assess, value, and manage physical climate risks within their individual investment decision‑making strategies.

Originally developed through the Coalition for Climate Resilient Investment (CCRI), PCRAM has been advanced by IIGCC to support wider adoption among institutional investors. PCRAM 2.0 builds on practical application through investor case studies and enhanced methodological guidance, bringing together climate science, engineering expertise and financial analysis to support decision-making.

PCRAM provides a structured, objective and replicable approach to identifying material physical climate hazards, assessing asset-level exposure and vulnerability, and translating risks into decision-useful financial insights. Applicable across asset classes, sectors and geographies, it is designed to complement existing investment, risk management and valuation processes.

Why physical climate risk matters for investors

Physical climate risks are already affecting investment portfolios and are expected to intensify as climate change accelerates.

PCRAM responds to the need for a common, investor‑focused approach that enables more comparable, transparent, and decision‑relevant assessments of physical climate risk and resilience.

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How PCRAM works

The methodology can be applied at multiple stages of the investment process, including:

  • Pre‑investment due diligence and asset selection
  • Portfolio‑level risk assessment and prioritisation
  • Ongoing asset management and monitoring
  • Stewardship, engagement, and resilience planning

 

IIGCC 06 2025 PCRAM 2.0 v12_Page_06

PCRAM 2.0

PCRAM 2.0 was developed through collaboration with investors and expert partners, drawing on lessons from practical case studies across sectors and geographies. The updated methodology, published in November 2025, enhances usability while strengthening the integration of resilience and value creation considerations.

 New enhancements include:

  • An investor portfolio and fund lens

  • Systems analysis

  • Value enhancement assessment and insurability considerations

  • Nature-based solutions as resilience building

  • Real estate applicability

Download PCRAM 2.0 and case studies

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PCRAM 2.0 PDF

What PCRAM 2.0 offers investors

PCRAM is relevant to real-asset developers, managers, and capital providers. It is applicable to both public and private sector assets, and is geography agnostic.

PCRAM 2.0 sits alongside IIGCC's Climate Resilience Investment Framework (CRIF), the first investor-specific and comprehensive resource to help develop their own individual climate adaptation and resilience plans.

Our infographic below maps how PCRAM 2.0 and CRIF interact. In short - CRIF charts the course, PCRAM assesses the terrain.

This methodology offers a range of benefits to investors, including:


 

Standardisation

PCRAM provides a consistent process for evaluating and managing investments in climate-resilient Real Estate and Infrastructure.

Risk and opportunity

It focuses on resilience benefits like predictable cash flows, enhanced credit quality, and efficient long-term cost management.

Efficient resource management

It encourages a holistic approach to risk management, ensuring effective resource allocation for building resilient assets.

Building investor knowledge

It can help institutional investors navigate uncertainty and inform their investment strategies.

IIGCC 08 2026 PCRAM CRIF graphic v6

Acknowledgements

We thank our funder, the UK Foreign, Commonwealth and Development Office, and our case study participants:

  • AXA Investment Managers / BNP Paribas AM
  • Howden
  • LSE Grantham Institute on Climate Change and the Environment
  • Mott MacDonald
  • Octopus Energy Generation
  • Oxford University Environmental Change Institute
  • Private Infrastructure Development Group (PIDG)
  • Stafford Capital Partners / Theia Investments
  • Swiss Re

What next?

Implementation guidance

It is recognised that many implementation barriers frustrate complete implementation of all recommended action points within CRIF.

The framework is designed to support efforts to address this issue, most notably through its ‘Policy Advocacy’ as well as ‘Stakeholder and Market Engagement’ sections which underpin systems stewardship efforts.

Additionally, further implementation guidance will be produced to support investor efforts to implement CRIF. This includes bringing stakeholders across the value chain together to work collaboratively to address barriers.

Expanding asset class coverage

The overall aim is to provide target setting and implementation guidance for the main asset classes that comprise most investment portfolios. Currently, guidance for all asset classes is not available but will be developed over time.

Gaining an understanding of the resilience of physical assets can help frame the resilience of the wider economic system within which corporates operate, either through their owned or operated physical assets, or those on which their value chains rely on.

For instance, infrastructure is considered an important initial asset class because its vulnerability has systemwide implications for all those that depend on it for public services and normal business operations.

In future, additional asset classes will be covered including sovereign bonds, as well as listed and unlisted corporate assets. On a best-effort basis, cross-cutting themes will continue to be integrated (e.g. nature and emerging markets).

News and insights

Read our insights and related guidance below to understand more about PCRAM, Adaptation and Resilience, and understand how investors are putting it into action.

29.07.26
Insights

Message from the CEO: Adaptation and resilience come to the fore - and a look ah...

As the UK and other parts of Europe face the prospect of further heatwaves following an already relentless and...
Read more

Related frameworks and resources

Climate Resilience Investment Framework

Guidance on managing the impact of physical climate risks in investment portfolios.

Learn more

Investor strategies

Helps members to effectively integrate climate risks and opportunities.

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Net Zero Investment Framework

The most widely-used investor methodology on net zero.

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