RM6.4: Physical Risk Impact Assessment

Maximum Score

1 point

Input Method

Assessment Portal

Prefill

Not eligible

Scoring method

Static

Validation

Evidence is manually validated

2026 Updates

Yes

Does the entity have a systematic process for the assessment of material financial impact from physical climate risks on the business and/or financial planning of the entity?

Assessment Instructions

Intent: What is the purpose of this indicator?

The intent of this indicator is to assess whether and how the entity uses a systematic approach for assessing the impact of physical risks on the business, operations, and/or financial planning of an entity.

Impact assessments are critical to understanding how specific risks manifest themselves on business, operations, and/or financial planning of an entity. The most sophisticated of these assessments address elements of probability and uncertainty, and translate them into financial outcomes that may then be used to inform strategic and tactical decision making.

Input: How do I complete this indicator?

Select yes or no. If yes, select all applicable sub-options.

Terminology

Entity-level

Explicitly applicable to the reporting entity as identified in EC1. Note that references to the overarching fund and/or group of which the reporting entity is part do not imply entity-level applicability.

Fund-of-Funds (FoF)

An investment fund that allocates capital across multiple underlying investment funds rather than directly investing in individual assets, securities, or properties. In the context of GRESB, a FoF entity will use the practices of it’s underlying funds to report and be measured on sustainability performance.

Material financial impact:

In the context of this indicator, material financial impact is used in accordance with its use by the TCFD to express information about impacts on an entity and its financial manifestations insofar as such information is deemed to be material. As per the TCFD, “in determining whether information is material ... organizations should determine materiality for climate-related issues consistent with how they determine the materiality of other information included in their financial filings.” Furthermore, “asset managers and asset owners should consider materiality in the context of their respective mandates and investment performance for clients and beneficiaries.”

Systematic risk identification process

A process for identifying risks that is structured, repeatable, undergone at regular intervals, and designed in such a way that it can capture the potential risks that could prove financial material to the entity. It may be a standalone process, or it may be a step within another larger risk assessment process. Furthermore, it may leverage quantitative methods (e.g., use of modeling, data analysis, quantitative thresholds) and/or qualitative methods (e.g., expert consultation, working groups).

Direct impacts

Direct damages to assets.

Indirect impacts

Impacts from supply chain disruption, or impacts on the entity’s financial performance based on changes in availability, sourcing and quality of water; food security; and extreme temperature affecting premises, operations, supply chain, transport needs and employee safety.

Validation: What evidence is required?

Evidence

The evidence and text box provided will be subject to manual validation.

The provided evidence must cover the following elements:

Demonstrates there is a systematic risk impact assessment process for physical risks in place and not simply a generic “climate-related risk” assessment.
Demonstrate financial outcomes of the physical risk impact assessment. It is expected that the document list/state which risks, or lack thereof, were identified as a consequence of the risk assessment having been carried out.
The outcome-based information must pertain to the entity/portfolio in question and not only to the manager/group/business-unit level. Note: For fund-of-funds, entity-level applicability must be explicitly established.
The risk assessments must apply to the reporting year or two years prior (2025, 2024, 2023).

Text box: Describe how the entity’s processes for identifying, assessing, and managing physical risks are integrated into its overall risk management.

Examples of appropriate evidence include, but are not limited to:

For Process: A document describing the entity’s process towards physical risk assessments or other tangible proof of the entity's risk assessment activity. This process-based information can include information akin to materiality determination, scenario analysis, modeling, or review of legislation.
For Outcomes: Acceptable evidence may include an extract of a procedure undertaken, such as a register or matrix, checklists, scenario analysis, or a section of a risk framework or risk management plan addressing physical risks. Such documents can help exhibit the outcomes of the risk assessments, such as the financial costs of the risks found in the reports.
For Entity-level Outcomes: Entity-level documentation that highlights specific physical risk impacts identified for the entity. If using group-level documentation, ensure the outcomes relevant to the entity are explicitly highlighted within the broader assessment.

Scoring

Scoring: How does GRESB score this indicator?

Scoring for this indicator is based on the existence of a systematic process for identifying physical risk impact, the outcomes of that process, and whether those outcomes are at the entity level.

Evidence: The evidence is manually validated and assigned a multiplier, according to the table below. The evidence must support the validation requirements.

If any requirements are not met, the evidence may be partially accepted or not accepted, depending on the level of alignment with the requirements.

Validation status

Multiplier

Accepted

2/2

Partially Accepted

1/2

Not Accepted

Scoring Basics

References

Carbon TCFD. (2017) “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures.”

TCFD. (2021) “2017 to 2021 TCFD Implementation Guidance (Annex) Summary of Changes”

TCFD. (2023) “TCFD Report Index: Implementation Guidance”

Get Support: Solution Providers

GRESB Solution Providers are independent, third-party organizations within the GRESB Partner network that offer specialized products, tools, and services to support sustainability performance outside the GRESB Assessment process.

The organizations below deliver commercially available solutions designed to help drive improvement for this indicator. Engagement is managed directly between the reporting entity and the Solution Provider.

GRESB will continue to update this section as the GRESB Solution Provider network grows. Please check back regularly to find GRESB Solution Providers who can support your sustainability performance.

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Last updated 4 days ago

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Assessment Instructions

Terminology

Evidence

Other Answer

Scoring

Get Support: Solution Providers