Publications Development finance

Addressing challenges of physical climate risk analysis in financial institutions

2 February 2021 - Climate Report - By : Romain HUBERT / Iulia MARGINEAN / Michel CARDONA / Christa CLAPP / Jana SILLMANN

While the financial consequences of climate impacts are already materializing, the regulators are implementing their agenda of actions to stimulate financial institutions into analyzing and managing their exposure to “physical climate risks”, and disclosing how they do so as recommended by the TCFD. How can financial actors make quick and efficient progress on analyzing and managing these risks? 

 

I4CE and CICERO release a synthesis report of practical lessons from the ClimINVEST project: a 3-year collaboration between European climate experts and financial institutions to move forward with physical climate risk analysis and management. The project gathered ClimINVEST partners Carbone 4, Climate Adaptation Services, CICERO, I4CE, Météo France and Wageningen Environmental Research as well as a number of financial institutions in France, the Netherlands and Norway. The participating institutions in France included AFD, BPCE, la Caisse des Dépôts, HSBC, Natixis.

 

The project shed light on four major challenges that were partly mitigated during the project: the tragedy of time horizons; the black box of climate services; data accessibility; the quantification of financial impacts.

 

There is still much work to do though. The report summarizes priority action points based on feedbacks from twelve financial institutions involved in the project and from the research partners. Financial actors should build further expertise on physical climate risks and experiment climate risk assessment on their own portfolios. To do so, they can capitalize on the publicly available ClimINVEST resources listed on the figure below. Mobilizing not only financial actors but also a broader range of stakeholders will also be a key determinant for quick progress on physical climate risks in finance. Regulators, supervisors, scientists, service providers, municipalities, etc. all have a role to play.

 

Access the clickable links of the graphic 

 

Click on this button to see the image

 

Romain Hubert, Project Manager at I4CE, explains in two minutes what the physical climate risk is and the challenges faced by banks :

 

 

Addressing challenges of physical climate risk analysis in financial institutions Download
I4CE Contacts
Romain HUBERT
Romain HUBERT
Chercheur – Risques climat, Acteurs financiers et adaptation Email
Michel CARDONA
Michel CARDONA
Senior associate Expert – Financial Sector, Risks and Climate Change Email
To learn more
  • 05/28/2025
    How can financial intermediation better contribute to the climate transition?

    Financial intermediation, understood as the indirect financing of beneficiaries through on-lending, equity investments, debt security, or guarantees to local financial institutions, has gained significant momentum over recent years. It is increasingly seen as a promising avenue to mobilise finance at scale, using concessional finance to leverage additional investments through financial intermediaries (FIs). Access to concessional finance can strongly motivate FIs to engage in climate-related investments, especially when they otherwise face financial constraints. With this additional finance, FIs can in turn fund local beneficiaries, including local financial institutions, through smaller size financial products.

  • 02/21/2025 Foreword of the week
    Public development banks: towards higher climate ambition

    Next week, representatives of public development banks and their stakeholders will gather in Cape Town for the 5th Finance in Common Summit (FiCS), to discuss how public development banks can align all their activities with the Sustainable Development Goals, the Paris Agreement, and the Global Biodiversity Framework. As the global network of public development banks, Finance in Common represents about 10% of total global development investments each year, which must all align with sustainable development pathways. This year, the discussions at FiCS will take place while South Africa hosts the first meeting of the G20 Finance Ministers and Central Bank Governors, with a focus on solidarity, equality, and sustainability.

  • 02/21/2025
    Climate Finance for Development: Empowering the Ecosystem of Public Development Banks

    2025 is a pivotal year for the interlocking global agendas of climate and sustainable development, highlighted by major convenings such as the 5th Finance in Common Summit (FiCS), the 4th International Conference on Financing for Development (FfD4), the G20 Summit under South Africa’s presidency, and the UNFCCC COP30. Public development banks (PDBs) will feature prominently across these events, given their integral role in implementing these critical agendas through financial support and stakeholder mobilization.

See all publications
Press contact Amélie FRITZ Head of Communication and press relations Email
Subscribe to our mailing list :
I register !
Subscribe to our newsletter
Once a week, receive all the information on climate economics
I register !
Fermer