PCRAM 2.0 offers a practical guide for understanding and managing the physical climate risks that climate change poses to real assets, appraising the adaptation options and linking it back to asset values.
The Physical Climate Risk Appraisal Methodology (PCRAM), formerly known
as the Physical Climate Risk Assessment Methodology, provides systematic, objective, and replicable guidelines for integrating physical climate risks into investment decision-making.
PCRAM 2.0 combines climate science, engineering, and finance to present a robust approach, adaptable to individual contexts.
This updated version can help investors, asset managers, and developers make better decisions by factoring in physical climate risks, such as floods, heatwaves and storms. Looking beyond risk, it can support investors to identify resilience investment opportunities according to financial materiality.
What's changed in PCRAM 2.0?
This latest methodology includes wider scope to consider portfolio and fund-level analysis, looking beyond individual assets. Updated systems thinking considers how assets interact with each other and with their surroundings.
Considering resilience metrics, insurability and credit quality, an improved value enhancement approach can help to protect and grow asset values as part of the PCRAM process. The updated appraisal also explores the potential of nature-based solutions, encouraging the use of natural systems, like wetlands or forests, to help build resilience.
A first case study explores real estate applicability, establishing the foundations for further implementation work. You can review all the updates in the document and through our change guide, included in the consultation form.
Open source and evidence-based
Alongside these updates, the essence of PCRAM 2.0 remains the same. Case study-led and evidence based, it builds on real-world feedback from industry experts, free and accessible to all to use or adapt to their individual contexts.
Four case studies, to be shared after the consultation window in Autumn 2025, show how PCRAM can be applied across different sectors and geographies. Additional guidance and examples will become available as more organisations adopt the methodology.
PCRAM is designed for real-asset developers, managers, and capital providers. It is applicable to both public and private sector assets and is geography agnostic. The methodology combines insights from climate science, engineering, and finance to incorporate physical climate risks into asset appraisal.
With climate change already affecting real assets, PCRAM 2.0 gives investors and asset owners a clear way to assess these risks and make more resilient, future-proof investments.
It aims to speak directly to investment decision-makers, offering practical applications for both institutional investors and businesses to navigate uncertainty. Consistency and confidence through a standardised process are core objectives.
The benefits of PCRAM 2.0
The methodology was initially developed by the Coalition for Climate Resilient Investment (CCRI) and successfully piloted through PCRAM 1.0 in practice case studies. PCRAM 2.0, led by IIGCC, expands its application across various industries and has tested its applicability with mainstream institutional investors through new case studies and the IIGCC Climate Resilience Investment Framework.
Thank you to our funder, the UK Foreign, Commonwealth and Development Office, and to our case study participants (listed alphabetically):