Risk classes of the superclass E2 - Climate change

ER 2.1 Physical risk (acute and chronic):

The class of physical risks looks at the threat that infrastructure assets face from natural hazards. In this section, we focus on climate-related hazards only.

Physical hazards can render the infrastructure asset inoperable (flooded roads as a result of a severe precipitation event), cause damage to the asset (road damaged as a result of a landslide) or to the supporting infrastructure (the damaged pipeline that supplies water to a coal power plant). In addition to this, physical events can alter the availability and quality of natural resources required as inputs for the activities of infrastructure companies.

The classification adopted by this taxonomy follows the classification of climate-related hazards used by the Task Force on Climate-Related Disclosures (TCFD, 2020) and the EU Taxonomy (TEG, 2020).

ER 2.1.1 Temperature-related risks:

Natural hazards resulting from changes in the global/regional/local temperatures. Examples of chronic temperature-related risks include:

• Changing temperature (air, freshwater, marine water)

• Heat stress

• Temperature variability

Examples of acute temperature-related risks include:

• Heat waves

• Cold wave/frost

• Wildfire

Infrastructure assets are very susceptible to changes in temperature. A temperature change can cause physical damage to the infrastructure assets, such as the buckling of roads and rails, softening of paved surfaces such as roads and runways, or pose operational risks to infrastructure assets. For example, as temperatures rise and increase the temperature of water bodies, the efficiency of nuclear plants drops as the water cannot be used to cool their reactors efficiently.

ER 2.1.2 Wind-related risks:

Natural hazards result, either from high wind events or from changes in the average global, regional, or local wind patterns.

Examples of chronic wind-related risks are changing wind patterns. Examples of acute wind-related risks include:

• Cyclones, hurricanes, typhoons

• Storms (blizzards, dust, sand)

• Tornadoes

Wind storms, hurricanes, tornadoes, and changing wind patterns can pose risks of physical damage (wind events causing damage to port crane infrastructure, blade damage or tower collapse of wind turbines during tornadoes) or cause operational risks to infrastructure assets (for example, loading/unloading operations have to be stopped in high winds to prevent the damage to crane equipment and cargo; airports have to suspend landing and takeoffs in high wind events for safety reasons).

ER 2.1.3 Water-related risks:

The physical risk resulting from too much or too little water at any given location. Examples of chronic water-related risks include:

• Changing precipitation patterns

• Precipitation or hydrological variability

• Ocean acidification

• Saline intrusion

• Sea level rise

• Water stress

Examples of acute water-related risks include:

• Drought

• Heavy precipitation

• Flooding (coastal, fluvial, pluvial, groundwater)

• Glacial lake outburst

Flooding risks are material to almost all types of infrastructure assets. Floods may cause structural damage to assets (causing scouring on foundations of bridges, damaging electrical components or multiple types of infra assets etc.) or cause temporary disruption such as that to transport networks in flooding events.

ER 2.1.4 Solid mass-related risk:

The physical risk resulting from the displacement or the physical movement of the earth. Examples of chronic solid mass-related risks include:

• Coastal erosion

• Soil degradation

• Soil erosion

• Solifluction

Examples of acute solid mass-related risks include:

• Avalanche

• Landslide

• Subsidence

Infrastructure assets along the coastline are at a constant risk of erosion causing damage to the foundation of the asset which can compromise its structural integrity. Avalanches and landslides, in addition to causing damage to the assets in their paths, can also block roads causing operational risks. Subsidence is also a very material risk for multiple types of infrastructure assets as it can cause very serious structural damage to roads, railways, bridges, airports, etc.

_{TCFD (2020). Task force on climate-related financial disclosures—2020 status report.}

_{TEG (2020). Taxonomy report: Technical Annex. Technical report, EU Technical group on sustainable finance.}