The Physical Climate Risk Assessment Methodology (PCRAM) is a one-of-its-kind methodology for improving the integration of physical climate risks (PCRs) into investment appraisal practices. The methodology was applied in three cases in its first iteration and one of the assets was a run-of-river hydropower project in the African region. This work was carried out pro bono as a best practice industry collaboration. PCRAM is intended to remain a public good which can standardize the process for implementation of resilience investment to infrastructure assets. By capturing and quantifying the value of resilience measures throughout an asset life cycle, PCRAM could enable value creation through more reliable cashflows and cost optimization, supporting approaches to monetizing resilience benefits, and can have a positive impact on credit quality and the cost of capital of resilient assets.

PCRAM was conceptualized and developed by the Asset Design and Structuring working group of the Coalition for Climate Resilient Investment (CCRI) in association with the engineering, development and management consultancy Mott MacDonald. This methodology was a response to a growing demand from investors who wanted comprehensive solutions for improving the integration of physical climate risks (PCRs) into investment appraisal practices. Apart from the above institutions, 35 other institutions, ranging from banks, investors, engineering firms, climate risk data providers, lenders, credit rating agencies and academic institutions, supported the development of PCRAM – making it a cross-industry effort to advance a dynamic impact assessment of physical climate risks that can be incorporated into investment decision-making Click to Read