Climate change is one of the most pressing challenges facing humanity today, with potentially severe implications for infrastructure assets. Infrastructure investments such as roads, bridges, ports, airports, and power plants have long lifetimes, typically spanning several decades, and are designed to operate under specific climatic conditions. However, climate change is causing more frequent and intense extreme weather events, such as floods, droughts, heat waves, and storms, which can damage or disrupt infrastructure assets. These physical risks can lead to direct losses, increased maintenance costs, and lower asset values.
At the same time, climate change induces changes in policy, technology, and consumer preferences that can impact the value of infrastructure assets. This is known as transition risks. For example, new regulations and carbon-pricing schemes could make carbon-intensive infrastructure assets less attractive or even “stranded”, leading to significant financial losses . Additionally, changes in consumer behaviour, such as a shift toward electric vehicles or renewable energy sources, could render certain infrastructure assets obsolete.
