EOPIA Warned on Climate Risks to Infrastructure Investment

In an open letter directed to Petra Hielkema, Chairperson of the European Insurance and Occupational Pensions Authority (EIOPA), the EDHEC Infrastructure and Private Assets Institute has warned of a looming climate risk crisis for investors in infrastructure. In a research report,  ‘It’s Getting Physical, the institute said the consequences of climate change are no longer a distant future concern. According to the report, certain infrastructure investors could face losses exceeding 50% of their portfolios due to climate-related risks, a scenario likely to unfold prior to 2050 if immediate action isn’t taken. Professor Noël Amenc and Dr Frederic Blanc-Brude, coauthors of the letter, said their study marks the first extensive analysis of unlisted infrastructure investments’ vulnerability to physical climate risk. Highlighting the implications of their findings, the authors asserted that EIOPA’s role as a consultative body for European entities positioned it to draw urgent attention to the destabilising influence of climate inaction. The institute underscored the importance of immediate measures to safeguard the pensions and insurance sector, especially in a landscape where institutional investors wield increasing influence in infrastructure funding. Professor Amenc said: “Our research underscores the pressing need for climate-integrated risk assessment in the solvency evaluation of insurance and pension institutions. Failing to address these risks not only endangers financial stability but also threatens the future viability of these critical sectors.

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