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
  • 12/01/2023 Foreword of the week
    COP28 : It’s money time !

    COP28 in Dubai kicks off amidst a worrying climate backdrop. For the first time, the threshold of a 2°C temperature rise compared to the pre-industrial era was exceeded in one day. In addition, a report published by the UN this week warns that current policies are placing the planet on a warming trajectory of 2.9°C, and that the chances of maintaining the increase at +1.5°C are now of only 14%. The results of the first Global Stocktake, a worldwide assessment of the actions taken by countries since the Paris Agreement, will be published at the COP and should confirm the urgent need to change the trajectory of greenhouse gas emissions. 

  • 11/29/2023 Blog post
    Climate finance: multiplying the numbers will not solve the equation alone

    Much of the discussions at COP28 will focus on the 100 billion USD/year target decided at Copenhagen to support climate investments in the Global South, and on the new climate finance goal set to replace it. But, whilst keeping our eyes on the volumes laid on the table, we also need to look more into the impact of every dollar spent. Identifying and building on the value added of every actor in the economy is essential to avoid overlaps and maximise synergies. Three types of actors have a pivotal role to play in the paradigm shift: governments, public financial institutions and private financial institutions.

  • 10/30/2023 Blog post
    Response to GFANZ APAC on financing the early retirement of coal-fired power plants

    NewClimate Institute and the Institute for Climate Economics (I4CE) submitted a response to a public consultation on the Glasgow Financial Alliance for Net Zero’s proposed set of voluntary guidance for financing the early retirement of coal-fired power plants in Asia-Pacific. This blog post highlights key points from our submission. Preventing the worst impacts of the climate crisis, particularly for the most vulnerable, requires halting coal-fired power plants (CFPPs) in the pipeline and retiring a substantial portion of the existing global coal fleet before the end of their technical lifetime. While countries have committed to phase out unabated coal in the Glasgow Climate Pact, 350 GW of new capacity is proposed globally with an additional 192 GW under construction.

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