How climate and nature-related factors are applied in the investment process

The report finds that while all surveyed infrastructure investors use ESG scoring frameworks, integration is most prevalent in qualitative evaluation and post-investment monitoring, with less emphasis on valuation modelling. Key drivers for ESG integration include financial returns, risk management, and brand reputation. Greenhouse gas (GHG) emissions and physical climate risks are the most integrated factors, particularly in the energy, utilities, and transport sectors, whereas biodiversity remains the least integrated due to quantification challenges. The report notes a shift from simple negative screening toward a more nuanced approach where investors may acquire unsustainable assets to finance their transition to sustainability.

• Infrastructure investors are primarily motivated to integrate ESG factors by the prospect of financial returns, the management of ESG risks, and the protection of brand reputation.
• ESG integration is most common during the qualitative evaluation and post-investment monitoring stages, while it is less prevalent in the screening and valuation modelling phases.
• There is a trend moving away from binary negative screening toward a nuanced approach where investors consider assets currently perceived as unsustainable to support their transition to a sustainable footing.
• Greenhouse gas (GHG) emissions and energy/resource efficiency are the most frequently reflected ESG factors in investment decisions, especially within the utilities, transport, and thermal energy generation sectors.
• Biodiversity is the least integrated ESG factor, largely because its key performance indicators are difficult to quantify and translate into financial impacts.
• A bifurcation exists in ESG approaches: smaller or indirect funds typically rely on external frameworks like the UN PRI and TCFD, while infrastructure specialists and multilateral development banks use a mix of proprietary and external tools.
• Physical climate risks are specifically critical for telecommunications (e.g., coastal fiber optic cables), utilities (e.g., flooding of power plants), and transport (e.g., airport flooding from sea level rise).
• The European Investment Bank (EIB) integrates environmental externalities into project appraisal using damage cost values and a carbon price that is projected to rise to €120 per tonne by 2050 to align with a 1.5°C temperature goal.
• Future priorities for infrastructure investors include acquiring higher-quality data, increasing the number of integrated ESG factors, and expanding ESG integration into more asset sectors.

APA

WWF International (2020). How climate and nature-related factors are applied in the investment process. https://www.worldwildlife.org/documents/585/3i93ucri66_wwf_incorporating_sustainability_into_infrastructure.pdf

Chicago

WWF International. How climate and nature-related factors are applied in the investment process. 2020. https://www.worldwildlife.org/documents/585/3i93ucri66_wwf_incorporating_sustainability_into_infrastructure.pdf.

Wikipedia

{{cite report |author=WWF International |title=How climate and nature-related factors are applied in the investment process |date=2020 |url=https://www.worldwildlife.org/documents/585/3i93ucri66_wwf_incorporating_sustainability_into_infrastructure.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wwfinternational2020how, author = {{WWF International}}, title = {{How climate and nature-related factors are applied in the investment process}}, institution = {WWF International}, year = {2020}, url = {https://www.worldwildlife.org/documents/585/3i93ucri66_wwf_incorporating_sustainability_into_infrastructure.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }