Asset Owners Can Use Physical Risk Data Boom to Push Managers, Says Nomura

Why It Matters

More detailed physical‑risk data raises manager accountability, helping asset owners protect capital and meet growing ESG expectations, while nudging the industry toward standardized climate‑risk reporting.

Key Takeaways

• Physical climate risk data availability has surged in past year
• Nomura urges asset owners to demand granular risk metrics from managers
• Enhanced data can trigger manager “snap to attention” on climate exposures
• Asset owners can embed data requirements into stewardship and voting policies
• Greater transparency expected to improve portfolio resilience and ESG performance

Pulse Analysis

The flood of physical climate‑risk data stems from advances in satellite imaging, high‑resolution weather modeling and a wave of regulatory mandates that require more precise exposure metrics. Providers such as MSCI, S&P Global and specialized climate‑analytics firms now deliver location‑level flood, heat‑wave and sea‑level rise scenarios that were impossible a few years ago. This data boom equips asset owners with the quantitative tools needed to assess how extreme weather could erode the value of real‑estate, infrastructure and corporate assets in their portfolios.

For owners, the strategic move is to embed these new data sets into stewardship frameworks. By demanding that managers disclose exposure at the asset‑level, incorporate scenario analysis into portfolio construction, and align voting decisions with climate‑risk thresholds, owners can turn data into a governance lever. Nomura’s recommendation to formalize data expectations in investment mandates and proxy voting guidelines turns raw information into actionable oversight, compelling managers to upgrade their risk models or risk losing capital.

The market impact will likely be a cascade of tighter ESG reporting standards and a shift in capital flows toward managers that can demonstrate robust physical‑risk integration. As owners wield data‑driven engagement, managers are incentivized to invest in climate‑analytics capabilities, partner with data vendors, and embed resilience metrics into performance benchmarks. This feedback loop not only strengthens portfolio durability but also accelerates the industry’s move toward a more transparent, climate‑aware investment ecosystem.