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We are pleased to share the first EDHEC Climate Institute edition of the "Research Insights" supplement in cooperation with Investment & Pensions Europe
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Climate Risk and Investors: Advancing Physical Risk Modelling, Climate Data, and Transition Technologies
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We are pleased to share the first EDHEC Climate Institute edition of the "Research Insights" supplement in cooperation with Investment & Pensions Europe (IPE). This issue reflects EDHEC’s ongoing commitment to tackling the pressing challenges of climate change through interdisciplinary research, building on its historical expertise in climate finance while integrating new complementary fields to deliver actionable insights for institutional investors:
IPE EDHEC Climate Institute special issue, Research Insights Supplement Spring 2025
This supplement explores critical themes at the intersection of finance and climate risk, including:
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- Climate Shocks or the Death by a Thousand Cuts? The Effect of Climate Change on the Valuation of Equity Assets While climate finance often emphasises transition risk, recent research highlights the underestimated impact of physical climate risk. Our study explores how extreme weather events and physical damage scenarios affect equity valuations under different policy and climate trajectories, revealing potential mispricing and the need for improved risk integration.
- Why We Need Climate Scenario Probabilities and How to Get Them Traditional climate risk assessments often treat transition and physical risks separately, overlooking their probabilistic interplay. We introduce a methodology to assign probabilities to emission abatement pathways, factoring in technological, fiscal, and policy feasibility. Our research highlights the low likelihood of meeting the Paris Agreement target and the need for better policy alignment.
- From Global Averages to Local Insights: Harnessing High-Resolution Data for Climate Risk Assessment and Resilience to Physical Shocks Climate change impacts are highly localised, yet financial models often rely on global averages that obscure sector- and region-specific risks. We explore how high-resolution climate data can enhance risk assessments by pinpointing geo-sectorial vulnerabilities, enabling investors, businesses, and cities to develop targeted adaptation strategies.
- Technological Solutions to Mitigate Transition and Physical Risks – Introducing the infraTech 2050 Database Net-zero pledges remain abstract without a clear understanding of the technological pathways for decarbonisation and resilience. The InfraTech 2050 initiative provides a systematic evaluation of technologies and strategies for decarbonising and strengthening resilience of 101 infrastructure asset subclasses with granular information. We illustrate this approach with a concrete example on data infrastructure, a critical backbone for modern economies.
- Charting a Pathway for Transition Finance – Lessons from the EU Framework Effective regulatory frameworks are essential to mobilising transition finance for decarbonisation. We examine its role in the EU Sustainable Finance Framework, highlighting gaps and flaws that hinder investment. Drawing on industry best practices and recent regulatory developments, we propose key areas for reforms to better integrate transition finance into climate policy.
We would like to extend warm thanks to Investment & Pensions Europe for their collaboration on the supplement.
We hope you find this research both informative and insightful.
Kind regards,
Maud Gauchon
Marketing & Communication Manager
maud.gauchon@climateimpactedhec.com
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About EDHEC Climate Institute:
Reflecting EDHEC Business School’s strategic commitment to sustainability and climate finance, the EDHEC-Risk Climate Impact Institute has evolved into the EDHEC Climate Institute (ECI), consolidating the School’s expertise in climate-related financial research and decision-making. ECI’s mission is to help private and public decision-makers manage climate-related financial risks and make the most of financial tools to support the transition to a low-emission economy that is more resilient to climate change. It has a long track record as an independent and critical reference centre in helping long-term investors to understand and manage the financial implications of climate change on asset prices and the management of investments and climate action policies. The institute has also developed an expertise in physical risks, developing proprietary research frameworks and innovative approaches. ECI is also conducting advanced research on climate transition risks, with a focus on supply chain emissions (Scope 3), consumer choices, and emerging technologies. As part of its mission, ECI collaborates with academic partners, businesses, and financial players to establish targeted research partnerships. This includes making research outputs, publications, and data available in open source to maximise impact and accessibility.
EDHEC Climate Institute
London | Nice |Paris |Singapore
E-mail: maud.gauchon@climateimpactedhec.com
Web: climateimpact.edhec.edu/
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