Scientific Climate Ratings: the missing link for investors

How do you assess the financial reality of climate risk? Scientific Climate Ratings, an entrepreneurial venture created by and within EDHEC Business School, may have come up with an answer by offering a rating system that’s unlike any other. To understand how it works, we sat down with its CEO Rémy Estran-Fraioli, who launched the initiative in 2025.

• This article was originally published in EDHEC Vox Magazine No. 17, available here

Greenwashing is widespread and environmental opportunism is rampant. We need a common language to discuss climate issues. We also need robust, shared tools to standardise climate impact assessments and to properly integrate them into Financial decision-making. Scientific Climate Ratings, a scientific startup developed within EDHEC, was created to address this need.

Anchored to the EDHEC Climate Institute, the startup draws on decades of research into climate finance and infrastructure. Chief executive Rémy Estran-Fraioli describes it as “the first rating agency dedicated to the financial materiality of climate risk, representing a clean break from traditional ESG ratings" — create a new financial language on climate that is both credible and science-based.

Beyond simple ratings

Scientific Climate Ratings works on two core types of ratings. 

The first, Climate Exposure Ratings (CER), measures an asset’s exposure to future climate risks under business-as-usual scenarios. “For transition risk, we track emissions across the entire value chain — from production to end use — and measure total carbon intensity and sensitivity to carbon pricing. For physical risks, we map exposure to climate hazards such as storms, floods, heatwaves and wildfires using satellite and geospatial data,” Estran-Fraioli says. “Damage functions” then convert these hazards into potential Financial losses. From A (least exposed) to G (most exposed), the rating currently focuses on infrastructure and covers more than 6,000 infrastructure systems globally.

The second type is called Climate Risk Ratings (CRR). It goes further by integrating climate risk data into financial valuation models. “As with exposure ratings, we consolidate all risk information into a single A-to-G measure. However, we also provide analysis of the expected impact on asset values,” the climate finance specialist says. These assessments incorporate seven distinct future scenarios, each of which is assigned a probability. “This approach captures all the plausible future states — at least those we have modelled — alongside how likely they are and maps their corresponding levels of risk.” Importantly, these ratings include adaptation and resilience measures implemented by infrastructure operators in recognition of their efforts on the ground.

Moving beyond ESG scores through the EDHEC ecosystem

EDHEC incorporates measures for decarbonisation and resilience using ClimaTech, a database built and operated by the EDHEC Climate Institute. This database catalogues and evaluates the effectiveness of strategies to reduce emissions and measures to limit damage to infrastructure.

The partnership aligns with work being conducted by the EDHEC Infrastructure & Private Assets Research Institute and anchors the “Generations 2050” strategic plan, in which climate finance is a central pillar. “EDHEC’s motto is Unleash Tomorrow. Launching a rating agency is a natural outgrowth of our commitment to the future climate finance,” says Estran-Fraioli.

Looking at the market more broadly, Scientific Climate Ratings operates within a somewhat fragmented international climate rating space that currently hinders integrating climate issues into financial assessments. “ESG scores aggregate environmental, social and governance dimensions. By attempting to measure everything simultaneously, they produce unclear signals and, crucially, dilute the specific impact of climate risk,” the scientist says. The agency avoids this pitfall by making the financial materiality of this risk the core of its ratings system. Their approach also differs from those used by insurance platforms: “Most limit themselves to ’high, medium, and low’ categories of exposure. We precisely quantify the financial impact of climate risk.”

Science at the centre

This positioning is underpinned by a strictly scientific approach to the issues at hand. The data that feeds the rating models comes from established sources including NASA and the ESA. The climate models themselves use research from the IPCC and Copernicus. The ClimaTech database follows the same principle by conducting systematic reviews of the scientific literature. The damage functions used in the models are likewise rigorously reviewed by scientific experts.

Such scientific excellence extends to the team itself. “We all have scientific backgrounds and work with supervisory, strategic and methodological committees made up of internationally recognised experts in climate, finance and risk modelling. In a field that’s often dominated by opinion and narrative, this scientific rigour genuinely differentiates us," Estran-Fraioli says.

Putting a value on the cost of inaction

Scientific Climate Ratings currently serves three main groups. Investors use the ratings to identify risky assets and make decisions accordingly. Infrastructure operators can hire the agency to identify vulnerabilities, prioritise investments in resilience, or communicate with funders. Lastly, Scientific Climate Ratings’ models can also be used to enrich the policies of financial institutions.

This can be seen in their collaboration with the World Bank, one of the scientific startup’s first clients. “We financially quantified the materiality of climate risk for three critical infrastructure assets in Brazil: an electricity distribution facility, road infrastructure and a water treatment plant. We then measured the value created by various investments in resilience to determine an internal rate of return. The World Bank now uses these models to show that climate resilience investments don’t merely represent a cost — they can be genuine levers for creating value. They reduce future losses, protect asset valuations and generate positive long-term returns.”

From private infrastructure to listed companies

Since its launch in 2025 the Scientific Climate Ratings has become fully operational when it comes to infrastructure. “Starting with a niche where we held a clear competitive advantage was important. EDHEC has this in the infrastructure segment, notably thanks to its work with the Monetary Authority of Singapore, which allowed us to build the world’s largest financial and extrafinancial database for infrastructure assets,” says Estran-Fraioli. Starting in 2026, it will extend its scope to listed companies.

Looking further ahead, the researcher and CEO has three main goals. First, to make Scientific Climate Ratings the benchmark for international climate risk — akin to S&P or Moody’s in credit risk. Second, to embed climate issues in every financial decision made by relevant stakeholders, from institutional investors to asset managers. Third, to significantly expand ratings coverage for listed companies, real estate managers and private equity firms. To achieve this, Estran-Fraioli will be relying on a team of thirty based in London, Paris and Singapore and steady support from EDHEC and the Climate Institute, which are helping shape and develop the agency’s growth.

Climate finance now has its own rating agency, with major implications for the business of financial risk assessment. The tool itself is one thing; it’s also evidence that a genuine cultural shift is underway.

 Photo by Paulo Simões Mendes via Unsplash