Climate Threat Resilience Data & Ratings

Census-Tract Granularity, 16 climate hazards + 4 tech risks, 60 years of data history

Manage Risk At The Asset Level

In response to the material risks of climate change on top-line revenue, bottom-line profit, and communities, both shareholders and stakeholders, plus regulators, seek greater transparency and action.

The latest HIP Investor Climate Threat Resilience Ratings (2024) integrate data-driven realities of hazard risk, ecological resilience, social vulnerability, mitigation efficiency, and state government readiness – to analyze and rate future investment risks and location-based resiliency. The big four climate drivers – heat, cold, wind, water – result in extreme temperatures, floods, droughts, wildfires, storms and more. HIP can deliver these for 3,100 US Counties, 8,000 census-tracts, 80,000 census-blocks, and even 10,000 square feet (quarter-acre).. HIP applies these ratings to 400,000 investments (equities, bonds, munis, sovereigns) – including for the VanEck HIP Sustainable Muni ETF’s criteria.

Climate Change Involves Global, National, Regional, and Local Risk

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The alarming reality of our changing climate is starkly evident in the escalating frequency and heightened intensity of natural disasters, ranging from severe storms to tornadoes. Since 1980, the United States has endured 376 billion-dollar disasters, accumulating costs exceeding $2.66 trillion.

Notably, the U.S. weathered 28 such events in 2023 with damages totaling $92.9 billion.
Natural hazard events pose investment risks through: costly physical damage; depreciation of productivity and capital; supply chain disruptions; reduced tax basis due to migration; increased insurance rates; and a general rise in uncertainty.

Climate Hazards Impact Asset Pricing

Physical risks of climate hazards have created potential mispricing of assets – retail stores, logistics centers, manufacturing plants, as well as transportation thruways. Across markets and asset classes, important factors include increased rates of flooding and accelerated capital depreciation. Which of your assets are mispriced? In which direction? HIP’s Climate Threat Resilience Ratings can inform your investment, asset management, and disposition choices.

Tech sectors like Software, SaaS, Business Services, and E-commerce operate extensive data centers – and stand at the forefront of acute climate risks including intensified wildfires and tropical storms. During London’s record-breaking 2022 heat wave, two global tech companies’ cloud-based data centers experienced service disruptions due to cooling failures, highlighting the vulnerability of these facilities to climate extremes.

Rating Future Risk & Resilience

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HIP Climate Risk & Resilience Domains

Risk Domain: Natural Hazards, Climate Threats, and Site Types

Human, building and agriculture related ratios of 16 types of climate threats and natural hazards based on the likelihood of each climate hazard event. Plus, 4 site types of technological risk (e.g. nuclear, waste, chemical) that can exacerbate asset value damage from potential climate hazards.

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Resilience Domain: Natural Environment

Wetlands, forests, grassland and shrubland offer valuable support in safeguarding communities and ecosystems. The extent and health condition of the natural environment directly contributes to ecological resilience – the disturbance a system can absorb and remain similarly useful.

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Resilience Domain: Governance

Collaboration among government, NGOs, and private entities enhances resilience to climate-related severe events. Indicators include: Government preparedness (mitigation project spendings, disaster aid experience), community preparedness (local disaster training, accident planning), and personal preparedness (insurance coverage).

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Resilience Domain: Society

Societal factors quantify the local community of people sharing the same geographical territory to confront climate risk. Indicators include: population health and vulnerabilities, financial stability, food security, social capital, social cohesion, labor skills, public safety, healthcare and other public services.

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Resilience Domain: Built Environment

The built environment is a material, spatial and cultural product of human labor that supports the flow of information, materials, and trade. HIP rates the susceptibility of existing infrastructure to potential extreme events (e.g. housing stock construction quality) and the resilience of infrastructure in mitigating the impact of natural hazards (e.g. temporary housing availability; transportation/communication infrastructure robustness).

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Resilience Domain: State Preparedness

With FEMA’s technical guidance, each state has developed State Hazard Mitigation Plans as blueprints to integrate future climate projections and informed adaptation actions for hazard mitigation. Our State Preparedness assessment incorporates the adequacy of state-level initiatives and funding plans to address climate-related disasters into our county-level Climate Threat Resilience ratings.

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Climate-Risky County vs Climate-Resilient County

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Risk

Human, property, and land loss attributable to earthquakes, and extreme weather (including temperature, hurricanes, landslides and wildfire)

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Society

Population health and vulnerabilities, local trade and labor economy, social cohesion, public safety, public and emergency services

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Governance

Community preparedness (dams, levees, earthquake-resistant construction), personal preparedness (homeowner & flood insurance), and natural resource conservation of resilient ecosystems.

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Natural Environment

Ecosystem types, biodiversity, and adaptability in predictive climate changes.

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Built Environment

Communication infrastructure, housing permitting and vulnerability, transportation access, utilities infrastructure, and vacant structures.

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State Preparedness

Adequacy of State-level initiatives and plans to address climate change related disasters and extreme-weather events.

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Coverage

HIP Rated Muni Universe: 124,000 US municipal bond issuers and impact entities, and 263,000 bonds.

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Reduced Risk

Both extreme weather events and climate change-induced migration pose the potential to devastate municipal bond issuers’ ability to repay their debts. By evaluating these events and communities' readiness to respond to these threats, HIP Investor’s Climate Threat Resilience ratings provide muni investors with valuable insight into otherwise ignored future credit risks.

Climate Action Reports

In addition to providing data and ratings, HIP works directly with cities, counties and regional partnerships to identify and implement financing pathways for climate action and adaptation initiatives, particularly those that prioritize measures that reduce greenhouse gases (GHGs) and have a positive return on investment (ROI).

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HIP Investor Ratings

HIP Impact Ratings are quantitative based ratings to fund positive impact and optimized risk-adjusted investments.

HIP ratings span...

Global Corporations
Municipal Issuers
Funds

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