How can financial actors make quick and efficient progress on analyzing and managing physical climate risks?


The  ClimINVEST project releases the final synthesis report of practical lessons learned during a 3-years collaboration between climate experts and financial actors. The Addressing challenges of physical climate risk analysis in financial institutions report summarizes identified challenges and priority action points to be taken in physical climate risk management and disclosure, based on the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD). 

Financial institutions in Norway, France and the Netherlands in collaboration with the project research partners have identified the main challenges of physical climate risk assessments: the black box of climate services, the tragedy of the time horizons, the data gaps and estimating financial materiality of climate risks. The ClimINVEST project has worked to address these challenges. The Getting Started report reviews the main methodologies that pioneering service providers have developed for physical climate risk analysis in finance, thus opening the black box of available climate services. A set of six factsheets  and a presentation series have been designed to support financial actors’ capacity building and demonstrate solutions to work around a diverse set of issues, such as discrepancies between financial decision making and climate time horizons. The interactive online platform showcases a comprehensive and user-friendly database of climate indicators developed at high resolutions (10 km) over Europe with guidelines and informative case studies on how the indicators can be used by financial actors in their risk assessments. Research developed by Orlov et al. (2019) employs an interdisciplinary approach to determine the economic losses of heat-induced reductions in outdoor worker-productivity in Europe in agriculture and construction sectors. 

Moving forward, the ClimINVEST capstone report outlines priority areas of action for financial actors and their stakeholders. Building expertise with financial institutions on physical climate risks and experiment climate risk assessment on their own portfolios is needed. To do so, financial actors can capitalize on the publicly available ClimINVEST resources. 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.

ClimINVEST project, Friday 12 February 2021