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Infrastructure projects need climate change risk assessments: Analysis

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Many investors in global infrastructure projects have not yet factored climate change into their risk models, according to an analysis by Marsh Inc.

According to “Sustainable Infrastructure — Weathering the Storms,” published Wednesday, the sustainability of infrastructure assets should be assessed at the beginning of a project and throughout its life cycle.

But, the report said, many investors — particularly those operating in sectors or geographical areas that are largely unaffected by severe weather or environmental pollution — do not consider climate change in their risk modeling and “still act as though these are issues to be tackled in the future.”

When negotiations about the allocation of risk between an infrastructure owner or operator and other counterparties are taking place, “it is vital that the infrastructure/owner gains a full understanding of risks that potentially could be considered force majeure” — or fall under act of God clauses — the report stated.

The resilience of assets against increased risks of climate change, “whether in the form of physical protections, operational redundancy and other mitigations to ensure stability of long-term operational performance,” must be addressed at each stage of a project’s design and construction, it said.

The report is available here.