Infrastructure investors overlooking climate threats

Business Green: Infrastructure investors are still failing to adequately consider the impact of climate change when making long term investments, leaving energy, transport, and communications developments exposed to mounting physical risks, insurance broking giant Marsh has warned.

A new report by the risk management specialist says the climate resilience of infrastructure assets such as new power stations, railways, or broadband networks, should be more widely considered at the project's inception, as well as all the way through its life cycle.

However, Marsh warns many investors have not built climate change into their risk models, particularly if they are operating in countries or sectors of the economy that are still largely unaffected by severe weather or environmental pollution.

The report argues the risks of failing to incorporate climate risks are huge: the estimated costs of the UK floods in 2007 was around £3bn, and in 25 years' time the Confederation of Business Industry predicts flood damage could cost the UK economy as much as £10bn each and every year.

Marsh also warns the threat posed by climate change is growing, stating in the report that "elevated global average temperatures and the incidences of extreme weather events are likely to become even more frequent and severe over coming decades". It adds that "an increase in the impacts of severe weather events on property and infrastructure looks likely".

The report suggests that wider climate change risk due diligence, which improves project delivery and operational efficiency throughout the asset life cycle, could help mitigate the risks...

The Sweetwater dam break of 1916