Advancing Climate Risk Research, Tools, and Portfolio Strategies Delivering Research Insights Double Materiality to the Financial Community Forward to a colleague Subscribe to our newsletter Climate Finance Highlights Issue n°5, August/September 2025 Welcome to the fifth edition of EDHEC's Climate Finance Highlights, bringing you the latest in cutting-edge research and practical applications done by our Institutes and initiatives on climate finance. This quarter, we spotlight the launch of Scientific Climate Ratings (SCR), an EDHEC Venture and the first European agency dedicated to assessing the financial materiality of climate risks. Developed from EDHEC Climate Institute (ECI) research, SCR combines climate science, geospatial analytics, and financial modelling to set a new standard in climate risk assessment. We analyse the underestimated economic costs of climate change, introduce a novel probabilistic framework for scenario modelling, and share findings from the ClimaTech project on infrastructure resilience strategies. This issue also features a study on the ethical foundations of climate alignment in portfolios, new open-access tools to explore climate and economic risks, and insights into portfolio management approaches for navigating climate transition risks. Latest Insights "After months of preparation, at a crucial time, we are embarking on an intense journey with knowledge and tools that are unique in the sector" In this interview, Rémy Estran-Fraioli, CEO of Scientific Climate Ratings – EDHEC’s new venture and the first rating agency fully dedicated to quantifying the financial impact of climate risk – discusses the origins of the project, its mission and its ambitions. Read More → The (significantly) underestimated financial costs of climate change In this article, Riccardo Rebonato, EDHEC Professor and EDHEC Climate Institute (ECI) Senior Advisor, looks back on an innovative paper, co-authored with Dherminder Kainth and Lionel Melin (ECI), in which they assess how the value of global equities can be significantly affected by both physical climate damage and transition costs. Read More → Recalibrating climate risks: how to assign probabilities to climate scenarios EDHEC Climate Institute’s latest white paper proposes a probabilistic framework to address the missing likelihoods in climate scenarios used for risk management and asset valuation. Using a dataset of 5,905 SCC estimates, it applies both expert-informed and maximum-entropy approaches. Results show a 35–40% chance of exceeding 3°C by 2100, stressing urgent policy alignment to avoid severe climate risks. Read More → Reference Publications A Question of Ethics? Climate Alignment in Equity Portfolios The study shows that climate alignment metrics for investment portfolios are shaped not only by science, but also by fundamental ethical choices. Various essential steps, such as the selection of targets and metrics, cannot be standardised on scientific grounds alone, and instead require value-based decisions. The heterogeneity of climate metrics and methodologies, which continues to provoke calls for standardisation, can often be traced back to unspoken ethical divergence. Reducing Infrastructure Climate Risk Through Technology Measures: An Overview This paper presents a synthesis of the most material strategies to address physical and transition risks, based on findings from the ClimaTech Project. It identifies and evaluates over 100 decarbonisation and climate resilience strategies applicable across 101 infrastructure asset subclasses, resulting in more than 1,800 unique asset-strategy applications. Covering sectors such as energy, water, transport, waste, and social infrastructure, this work goes beyond strategy mapping to identify the specific technologies required for implementation at the asset level. How to Assign Probabilities to Climate Scenarios The authors propose a novel framework for attributing probabilities to long-term climate scenarios. This responds to a critical shortcoming in existing scenario analysis tools used in financial regulation and investment strategy, which typically lack a probabilistic dimension. They argue that without probabilities, scenarios are limited in their ability to inform risk-adjusted decision-making. Scientific Portfolio Research Insights Supplement to Investment & Pensions Europe (IPE) In this supplement, the authors look at risk-based diversification benefits for equity investors; climate transition risks in portfolio management; the informational overlap between ESG scores and screening strategies; the impact of exclusion policies on the financial risks of indexes, and frameworks for identifying portfolio decarbonisation drivers. Videos and Podcasts Beyond Greenwashing: Proven Strategies to Protect Infrastructure from Climate Risk Turning Climate Science into Financial Insights – Scientific Climate Ratings Now You Know - A New Standard in Climate Risk Assessment The True Cost of Climate Change – Alter Cop 29 News EDHEC Climate Institute Unveils Open-Access Tools to Explore Climate and Economic Risks From Greenwashing to Measurable Impact: Highlights from the ClimaTech Webinar EDHEC Co-Hosts Adaptation Days 2025 with EIB and European Commission During UN Ocean Conference EDHEC Business School unveils its new initiative: Scientific Climate Ratings (an EDHEC Venture) ScholarGPS: Riccardo Rebonato Named “Highly Ranked Scholar” Discover the Fourth Edition of EDHEC's Climate Finance Highlights Forthcoming Events 28 August - Scientific Climate Ratings - Turning Climate Science into Financial Insights, an IPE webcast Join us for an upcoming webinar where will show how Scientific Climate Ratings quantifies the financial materiality of climate risk. Walking through the underlying methodologies, they we will demonstrate how these ratings help investors, corporates, and public institutions make better-informed decisions and drive climate-resilient investments. Register → 16 October - Scientific Portfolio - Ethics in Climate Investing — Why Portfolio Alignment Is More Than Just Science, an IPE webcast Join us for a webinar on Scientific Portfolio’s latest study, showing that climate alignment equity strategies are often seen as objective and solely science-based but in reality embed ethical choices. From scenario selection to carbon budget allocation, these value judgments can significantly affect portfolio and sector outcomes. Discover why transparency on these ethical foundations can help investors customise strategies in accordance with their objectives. Register → In the Press Reuters - EDHEC launches ratings to track climate hit on infrastructure assets Net Zero Investor - Collateral climate haircuts: the ECB’s new ‘climate factor’ could reshape bond portfolios? Pensions & Investments (P&I) - A Scientific Approach to Quantifying Climate Risk Proximo Infra - Climate risk clouds infrastructure development The Banker - How climate risk will reshape banking in Europe Investment International - EDHEC Climate Institute sees 40% chance of +3°C by 2100 Les Echos - Climat : « Près de 600 milliards de dollars de perte de valeur potentielle dans les infrastructures » L’Agefi - L’Edhec dévoile son agence de notation dédiée à l’impact financier des risques climatiques EDHEC Business School, 393 Promenade des Anglais, BP 3116, 06202 Nice Cedex 3, France Privacy Policy | Update | Unsubscribe | Forward