The Institutional Investors Group on Climate Change (IIGCC) has called for input on the development of its Climate Resilience Investment Framework.

In its paper, Working towards a Climate Resilience Investment Framework, the group stated that the framework should address asset risks, portfolio risks and systemic risks.

IIGCC explained that the multi-layered approach is based on the principle and supporting evidence that the physical impacts of climate change can have systemic consequences, such as severe drought driving up prices across the global food supply chain.

The group’s proposed structure for the Climate Resilience Investment Framework covers five areas: governance and strategy, targets and objectives, strategic asset allocation, asset class alignment, and policy advocacy and market engagement.

Each of the five areas are underpinned by steps that investors can take now to support climate resilience objectives.

The framework also aims to adopt the same broad approach to target setting as the Net Zero Investment Framework but, recognising the physical risk and resilience landscape is nascent, the initial focus of indicators will be on action investors can take now to support resilience efforts and manage physical climate risk in portfolios.

IIGCC CEO, Stephanie Pfeifer, commented: “The physical impacts of climate change are posing an ever-increasing risk to investors across different geographies, sectors and asset classes.

“Therefore, with a fiduciary duty to manage risk on behalf of their clients, the fundamental need for investors to understand the impact of physical climate risks to their investment portfolios has also risen markedly.

“Critically, not only does the proposed Climate Resilience Investment Framework aim to help investors better understand their exposure to physical climate risk, but it also seeks to promote investor action that will build climate resilience at an asset, portfolio and wider societal level.

“We look forward to collaborating with interested parties on the future development of the framework.”

IIGGCC adaptation and resilience working group co-lead, Marion Maloney, added that she hoped IIGCC’s Climate Resilience Investment Framework is the impetus for wider action across the investment community and that together they can help build a clean and climate-resilient future.

The deadline for providing feedback on the discussion paper is Friday 14 October.

IIGCC detailed that, once feedback has been reviewed by IIGCC’s adoption and resilience working group, IIGCC will beginning trialling components with investors and then releasing them on an iterative basis over the course of 2023 and beyond.

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