The TCFD (Task Force on Climate-related Financial Disclosures) is a group of international financial institutions that have developed a set of recommendations for companies to report on their climate-related risks. One of the key recommendations of the TCFD is that companies should disclose their carbon intensity, which is a measure of the amount of greenhouse gases emitted per unit of output. However, obtaining accurate data on carbon intensity can be difficult and expensive, especially for infrastructure assets.
EDHEC Infra & Private Assets has developed a methodology for estimating carbon intensity using a combination of reported data, physical models, and statistical techniques. This methodology allows investors to obtain accurate and granular estimates of carbon intensity at a fraction of the cost of a full asset-level audit. In addition to carbon intensity, the article also discusses the TCFD’s recommendations for reporting on physical risks, such as the risk of damage from extreme weather events. EDHEC Infra & Private Assets has also developed a methodology for estimating physical risks, which uses a combination of asset-level geo-data, hazard models, and damage functions. Obtaining accurate data on climate-related risks is increasingly important in order to make informed investment decisions.