Last week, Nest Pensions and UBS Asset Management launched a whitepaper on physical climate risk analytics at a roundtable event in London. The event brought together asset owners, asset managers, standard setters, data providers and academics to discuss practical ways forward to improve the availability and usability of physical climate risk insights.
CGFI contributed to this work through a secondment into Nest’s Responsible Investment team in 2024. Our research focused on assessing physical climate risks, evaluating the limitations of current climate science and models, comparing different analytics vendors, and running proof-of-concept analyses using open datasets and tools.
The paper underscores that while climate risk models are essential for investors to assess and quantify physical risks in their portfolios, they remain incomplete due to significant data gaps. Addressing these challenges requires concerted action across the financial system. To tackle these challenges, the whitepaper sets out four key recommendations for market participants:
- Data providers must enhance the clarity and consistency of analytical models and data on physical risk events
- Companies should quantify and disclose risks in a granular, location-specific manner
- Capital markets and regulators must adopt a standardized approach to integrating physical climate risk
- Investors should expand their engagement with companies and policymakers on physical climate risk
Discussions at the roundtable event echoed concerns and requests from the whitepaper while also highlighting opportunities for learning from the insurance sector’s approach to data and risk management. Participants also highlighted the importance of advocating for adaptation and resilience with real economy sector regulators.
At CGFI, we aim to mainstream climate science and connect practitioners with researchers. Collaborations like this demonstrate how bridging climate science and finance can drive meaningful progress and activate the wider market to increase ambition on climate objectives.
Nest (National Employment Savings Trust) is a UK-based workplace pension scheme with over 13 million members and GBP 50 billion assets under management (AUM) as of March 2025. Nest’s investment strategy focuses on managing both transition and physical climate risks through asset allocation, fund manager selection, stewardship, and public policy advocacy.
UBS Asset Management is a global asset manager offering investment capabilities across all major traditional and alternative asset classes.
photo: UBS Asset Management
