Understanding the effects of climate change on infrastructure investment strategy
Charles Allison, an ERM Partner involved in ERM's delegation to the COP21 Climate Change Summit, was interviewed by Infrastructure Investor magazine to discuss how ERM helps investors mitigate the risks and capitalize on the opportunities created by climate change. The interview was part of an issue focused on the future of infrastructure, framed by emerging trends such as technology and climate change.
The interview touched on a variety of topics, including the rising prominence of climate change as a critical business issue and the varying degree of understanding regarding material consequences. Charles noted, "ERM is seeing a growth in client interest in understanding the commercial consequences of a changing climate policy for long-term infrastructure investments from project inception and design, through financing, construction and operational management." Given the significant investments that can be in place for decades, it is essential to consider current and future policy, market, regulatory and operational effects of climate change
Charles discussed the ways in which ERM is advising our clients – including project developers, asset managers, investors and lenders – in understanding and addressing these risks. Solutions range from fulfilling reporting requirements; analyzing carbon emissions and related financial risks to portfolios; assessing the maturity of environmental, social and governance policies; and a wide variety of other developmental and operational concerns. The interview stressed the importance of understanding the ways in which each investor's project is unique in its situation and associated risks.
ERM has applied these insights into major infrastructure projects, including rail developments, airport infrastructure and industrial facilities – with clients understanding that management of a changing climate is a key risk in these long-term investments.