Category: Knowledge Library

In a warming world, access to cooling is an everyday essential

In a warming world, access to cooling is an everyday essential

By Elisa Jiménez Alonso

A recently released report by Sustainable Energy for All finds that 1.1 billion people around the world face immediate risks from insufficient access to cooling. According to the report, access to cooling is an important emerging opportunity in climate adaptation innovation.

Rachel Kyte, CEO and Special Representative to the United Nations Secretary-General for Sustainable Energy for All, said “In a world facing continuously rising temperatures, access to cooling is not a luxury – it’s essential for everyday life. It guarantees safe cold supply chains for fresh produce, safe storage of life-saving vaccines, and safe work and housing conditions.”

The study shows that access to cooling is very much tied to wealth. Of the 1.1 billion people at immediate risk, 470 million are in poor rural areas and 630 are in hotter, poor urban slums. These people are also concentrated in nine countries across Asia, Africa and Latin America: India, Bangladesh, Brazil, Pakistan, Nigeria, Indonesia, China, Mozambique and Sudan.

Cities, communities, and country leaders are asked to consider cooling action plans in order to close the access to cooling gap. Additionally, the Kyte points out that for companies that produce HFC-free, affordable air conditioning devices there is an enormous market opportunity out there.

In addition to the 1.1 billion rural and urban poor at immediate risk, the report identifies 2.3 billion people from the increasingly affluent lower-middle class, on the brink of being able to afford air conditioning, and 1.1 billion belonging to the established middle class, many of whom own air conditioning units but may able to upgrade them to more efficient ones.

This also ties into findings recently presented in a report completed by Acclimatise with UNEP FI and sixteen leading international banks. The report focuses on climate-related physical risks and opportunities to the banking sector. One of the examples named is an increased demand for loans for home improvements in order to cool houses where it was previously unnecessary.

While cooling is increasingly becoming a necessity, it is also a very energy-intensive measure. Increased cooling from HFCs and using fossil fuel powered energy can lead to more warming. In Mumbai alone, 40% of power use comes from air conditioning. Thus, phasing out HFCs, for instance through the Kigali Amendment, and the continued investment in renewable energy sources should remain priorities.

At the same time, urban development and real estate have the opportunity to radically rethink how buildings and cities can be designed in order to optimize cooling. In India, for example, 75% of the buildings required by 2030 have yet to be built, offering a massive opportunity to be innovative and provide cooler cities and housing.

Download the report by clicking here.


Cover photo by  PDPics/Pixabay (public domain): Mumbai skyline.
16 of the world’s leading banks collaborate to tackle physical risks of climate change

16 of the world’s leading banks collaborate to tackle physical risks of climate change

By Will Bugler

Sixteen leading banks, UN Environment Finance Initiative (UNEP FI) and Acclimatise, have published new methodologies that help banks understand how the physical risks and opportunities of a changing climate might affect their loan portfolios.

The methodologies, published in the report “Navigating a new climate”, were piloted across three climate-sensitive industry sectors: agriculture, energy and real estate. Using the methodologies, banks can begin to assess physical climate risks in their loan portfolios, evaluating the impacts on key credit risk metrics – Probability of Default (PD) and Loan-to-Value (LTV) ratios. The forward-looking assessments offer longer-term insights that go beyond the usual stress-testing horizon of 2-3 years.

“This report provides a practical way to assess the physical risks of climate change, which we have piloted on our real estate mortgage portfolio to consider how flood risks could impact Barclays’ customers now and in the future,” said Jon Whitehouse, Head of Government Relations & Citizenship, Barclays, “this type of assessment helps us to manage climate change risk and opportunity, both at a transactional and portfolio level.”

The methodologies are designed to enable banks to be more transparent about their exposure to climate-related risks and opportunities, in line with the recommendations of the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD).

“The physical impacts of climate change may pose a risk to banks’ loan portfolios. The innovative methodologies…provide foundations which can be built upon, as research and data analytics improve,” said Acclimatise’s Chief Technical Officer, Dr Richenda Connell. “Once banks understand the scale of the risks, this will be a milestone that will encourage other corporates to take climate risk management seriously. Building resilience to physical climate impacts also presents banks with investment opportunities. Those that understand this best will have a competitive advantage.”

The methodologies demonstrate that physical risks will worsen if the global economy continues on its current greenhouse gas emissions pathway. Future negative impacts could be reduced somewhat, but not avoided completely, if strenuous and rapid efforts are made globally to cut emissions.

The guidance also aims to inform banks’ strategies to support clients in adapting to changing conditions. Clients who face physical risks may need to make investments to become more climate-resilient. What’s more, global markets are developing for providers of climate-related products and services, as companies such as engineering and technology providers are identifying opportunities to capitalise on shifting market trends. Banks may have opportunities to support these investments.

A separate, complementary report focused on the assessment of transition risks and opportunities, was published in April.

“For financial institutions and other market actors, effectively managing and responding to climate change always means two things: understanding and responding to the intensifying physical impacts of unavoidable climate change; and also mitigating the risks and seizing the opportunities from the decarbonisation of the economy,” said Eric Usher, Head of UNEP Finance Initiative.

“We are proud of our collaboration with these 16 leading banks and Acclimatise in the development of methods and tools that will help the global financial industry respond to climate change in a holistic manner, spanning both the physical and transition dimensions of the challenge.”

The banks leading this work and currently piloting the methodologies are ANZ, Barclays, BBVA, BNP Paribas, Bradesco, Citi, DNB, Itaú Unibanco, National Australia Bank, Rabobank, Royal Bank of Canada, Santander, Société Générale, Standard Chartered, TD Bank Group and UBS.

Download a copy of the ‘Navigating a new climate’ report from here.

Global briefings to the industry will be carried out via webinars on Tuesday 14 August, 09:00
and 16:00 CET. To register please send an email to kai.fischer@un.org and/or
sally.wootton@un.org.

For more information, please contact Acclimatise’s communications team:

Will Bugler w.bugler@acclimatise.uk.com and Elisa Jiménez Alonso e.jimenez-alonso@acclimatise.uk.com

 

Climate finance from multilateral development banks hit record high of $35.2 billion in 2017

Climate finance from multilateral development banks hit record high of $35.2 billion in 2017

By Elisa Jiménez Alonso

Climate financing by the world’s six largest multilateral development banks (MDBs) rose to a seven-year high of $35.2 billion in 2017. That equals an increase of nearly 30 per cent on the previous year, boosting projects that help developing countries cut emissions and address climate risks.

The MDBs’ latest joint report on climate financing said $27.9 billion, or 79 per cent of the 2017 total, was devoted to climate mitigation projects that aim to reduce harmful emissions and slow down global warming.

The remaining 21 per cent, or $7.4 billion, of financing for emerging and developing nations was invested in climate adaptation projects that help economies deal with the effects of climate change such as unusual rainfall patterns, worsening droughts and extreme weather events.

While the boost in climate finance is a welcome development, climate change adaptation is still severely underfunded. Adaptation and mitigation should not to be seen as competing interests, rather they are complementary strategies to a problem that needs addressing from several different angles. As such, the need to scale up finance is urgent for both, however, adaptation has a lot of catching up to do.

According to UNEP, global estimates on the costs of adaptation suggest that between $280 billion and $500 billion need to be spent each year by 2050 in order to build climate resilience under higher emission scenarios. This massive finance gap is already noticeable in developing countries, many of which are on the frontlines of climate change.

The mobilisation of financial resources for climate adaptation (and mitigation) is a very important signal of political will and commitment to respond to climate change and its associated impacts.


Read the full press release about the joint report here and download the full document by clicking here.

Cover photo by UN Women/Flickr (CC BY-NC-ND 2.0).
New approach puts theory of Climate-Resilient Agriculture into practice on the ground

New approach puts theory of Climate-Resilient Agriculture into practice on the ground

South Asia has a population of roughly 1.75 billion people, 25% of whom fall below the international poverty line, and 70% live in rural areas of whom the majority, especially women, rely on agriculture for their livelihood. Despite being predominantly agrarian, Afghanistan, Bangladesh, and Nepal are net importers of food. Climate change adds further stress to this highly challenging socio-economic situation. Climate change, in the form of increased temperatures, erratic precipitation, uncertain seasons and increased intensity and frequency of extreme weather events, is expected to exacerbate food security challenges by impacting food production, disrupting supply chains and raising food prices.

Since 2014 the Action on Climate Today (ACT) programme has been actively working in five South Asian countries – Afghanistan, Bangladesh, India, Nepal and Pakistan – to help national and sub-national governments mainstream adaptation to climate change into development planning and delivery systems. ACT has championed Climate-Resilient Agriculture (CRA) as an approach to increasing the resilience of agricultural systems on which billions rely. CRA is a subset of Climate-Smart Agriculture which has a broader focus that includes interventions to mitigate greenhouse gas emissions (GHGs).

The ACT learning paper introduces a framework of practical entry points at the national and local level to operationalise CRA. The framework targets the full agricultural process from farm to market with the following entry-points for increasing resilience:

  • Policy and institutions;
  • Finance;
  • Information and knowledge management;
  • Technology and asset management.

The paper explores these entry-points through examples of CRA supported by the ACT programme. It also identifies and discusses the challenges and knowledge gaps that currently exist in interacting and working with governments and organisations on CRA and a set of overarching lessons from the programme.

South Asia will face increased warming, increased extreme temperatures (including heat waves), increased incidences of extreme precipitation and sea level rise as a result of climate change. This in turn carries the potential for social unrest, economic downturn and political upheaval and threats to national and local food security. Therefore, there is an urgent need to scale up climate resilient agriculture across South Asia. ACT’s framework provides a range of practical entry-points that can operationalise and scale-up CRA across the region.


The full ACT learning paper “Climate-Resilient Agriculture in South Asia: An analytical framework and insights from practice” and a learning brief can be accessed by clicking here.

Listen to the two 60-second audio abstracts:

ACT (Action on Climate Today) is an initiative funded with UK aid from the UK government and managed by Oxford Policy Management (OPM).

For more information, please contact:

Cover photo by Nandhu Kumar on Unsplash.
New study finds legal sector demand for climate services very likely to increase in near future

New study finds legal sector demand for climate services very likely to increase in near future

By Richard Bater

Law, and therefore legal services, will be indispensable to achieving a just transition to a low-carbon economy, as well as to ensuring that societies are resilient in the face of future climate-related risk. This renders the legal profession an essential actor, be it through crafting clear and robust legislation, ensuring compliance, or upholding constitutional rights.

New research by Acclimatise, that examines the legal sector’s demand for climate services, finds that whilst climate change has ranked very low on the sector’s agenda this has started to change during the last three years. This is partly attributable to new legislation – which increased 20-fold during the 20 years to 2017 to reach 1,200 laws – but is also due to the increasing recognition on the part of lawyers and their clients that climate change means material risk.  In future, individuals and organisations will increasingly solicit advice as to what their legal duties are vis-à-vis climate change in respect of existing (and forthcoming) laws and established legal doctrines, as well as to be shielded from climate-related litigation.

Climate change is cross-cutting and raises implications – to a greater or lesser degree – across the majority of areas of legal practice, from professional negligence, to product defect, to directors’ duties, to climate disclosure, to constitutional rights. Legal risks can arise, for example, where climate change results in organisations breaching existing compliance requirements (e.g. water quality standards).  With the reinterpretation of common law doctrines in light of climate change, failure to become adequately informed about – and manage – climate-related risk could lead directors to be in breach of directors’ duties. As Jason Betts, Partner at Herbert Smith Freehills, has observed, in order to mitigate litigation risk “companies across all sectors must ensure that the impact of climate change events – both those they may contribute to and those that might affect their businesses and profitability – are risk-assessed, costed and, where material, disclosed to the market.”

Emerging disclosure arrangements – such as those promoted by the Taskforce on Climate-Related Financial Disclosures (TCFD) – are putting climate-related risk on the boardroom agenda. By rendering climate risk a material issue that must be dealt with by organisations today, such initiatives help to bring organisational decision making on climate change into line with the timeframes within which action must be taken to limit the magnitude and risks of climate change.

Climate change adaptation, from a legal perspective, requires a highly collaborative approach; the bringing together of a range of legal skills and expertise.

– Mark Baker-Jones

Accurately disclosing climate-related risks – and proving disclosure breaches – is just one area that can require multi-disciplinary expertise, spanning climate and legal services. Indeed, as reflected by Mark Baker-Jones, more broadly “climate change adaptation, from a legal perspective, requires a highly collaborative approach; the bringing together of a range of legal skills and expertise.”  Underdevelopment of tailored climate services partly explains the hesitation of regulators to impose more stringent requirements: if regulatory provisions step too far beyond what is able to be reliably measured in a comparable way, regulators cannot be certain that regulations are being complied with and producing the change intended. Improving the robustness of harmonised and comparable climate risk metrics is essential. As Baker-Jones has also stated, “what is missing is the translation of that [climate] knowledge into practical advice and guidelines that those leading the private sector can understand and apply…Whether it is redefining the point at which liability is incurred or introducing new levels of liability where before there appeared to be none, climate change law is driving a reinterpretation of some fundamental principles of duty and responsibility.”

The study identifies several key ways in which climate services can better address the sector’s needs:

  • Develop the science of climate attribution, impact modelling, and integrated socio-economic climate impact models (including counter-factual scenario modelling);
  • Rigour, resolution, and comparability are the three highest ranking criteria of climate-related information;
  • Increase dialogue between legal services, climate scientists, and climate services;
  • Communicate climate knowledge in ways intelligible to legal audiences, including how findings correspond with legal standards of proof;
  • Develop a quality assurance regime for climate services providers.

Where climate science is evolving rapidly, there needs to be more accessible regularly-updated, spatially-nuanced communication of the state of climate (attribution) science that summarises the ‘consensus’ view to legal and other audiences in mind. A thorough record of this could become a touchstone for what is considered – and what was considered – ‘reasonably foreseeable’ at a given point in time, both guiding decision making in the present and enabling future accountability for harm.

The case study was led by Acclimatise under the MArket Research for a Climate Services Observatory (MARCO) programme. MARCO, a 2-year project coordinated by European Climate-KIC, hopes that research such as this will help to remove the barriers to the growth of the climate services industry across Europe.

Download the full case study “Legal Services” by clicking here.


Please check the MARCO website for the full suite of MARCO case studies.

The MARCO project has received funding from the European Union’s Horizon 2020 Research and Innovation Program under Grant Agreement 730272.

New study shows billions of urban citizens at risk of climate-related impacts by 2050

New study shows billions of urban citizens at risk of climate-related impacts by 2050

New research by Acclimatise, C40, the Urban Climate Change Research Network (UCCRN), and Global Covenant of Mayors for Climate & Energy reveals number of cities and citizens threatened by direct and indirect climate hazards if global greenhouse gas emissions continue unchecked. Bold climate action by cities is key to prevent 1.6 billion people being exposed to extreme heat, 800 million to coastal flooding, and 650 million to droughts. 

Billions of people in thousands of cities around the world will be at risk from climate-related heatwaves, drought, flooding, food shortages, blackouts and social inequality by mid-century without bold and urgent action to reduce greenhouse gas emissions. Fortunately, cities around the world are delivering bold climate solutions to avert these outcomes and create a healthier, safer, more equal and prosperous future for all urban citizens.

This new research predicts how many urban residents will face potentially devastating heat waves, flooding and droughts by 2050 if global warming continues on its current trajectory. The Future We Don’t Want – How climate change could impact the world’s greatest cities also looks at indirect climate impacts and estimates how climate change under a ‘business-as-usual scenario’ will impact urban food security and energy systems as well as the urban poor, who are most vulnerable to climate change.

Headline findings include that, by 2050

The Future We Don’t Want also contains concrete examples of bold climate solutions that cities are delivering, which, if adopted at-scale, could help prevent the worst impacts of climate change. The research was launched at the Adaptation Futures conference in Cape Town, where representatives of cities around the world are sharing ideas on how to prepare and adapt their cities for the effects of climate change.

“For decades, scientists have been warning of the risks that climate change will pose from increasing global temperatures, rising sea levels, growing inequality and water, food and energy shortages. Now we have the clearest possible evidence of just what these impacts will mean for the citizens of the world’s cities, said Mark Watts, Executive Director C40 Cities. “This is the future that nobody wants. Our research should serve as a wake-up call on just how urgently we need to be delivering bold climate action.”

“For most C40 cities, the impacts of climate change are not a far-off threat. From Cape Town to Houston, Mayors are seeing severe droughts, storms, fires and more,” said Antha Williams, Head of Environmental Programs at Bloomberg Philanthropies and C40 Board Member, “As this report shows, C40 mayors are on the front line of climate change, and the actions they take today–to use less energy in buildings, transition to clean transportation and reduce waste—are necessary to ensure prosperity and safety for their citizens.”

“Climate change is already happening, and the world’s great cities are feeling the impact. Cape Town is facing an unprecedented drought, but thanks to the efforts of our citizens to adapt, we have averted Day Zero, when we would have had to switch off most taps,” said Patricia de Lille, Executive Mayor of Cape Town and Global Covenant of Mayors for Climate & Energy Board Member. “The lessons from Cape Town, and from this important new research is that every city must invest today in the infrastructure and policies that will protect citizens from the future effects of our changing global climate.”

City climate solutions featured in the report include:

  • Extreme heat: Seoul has planted 16 million trees and expanded its green space by 3.5 million m2. The city has also set up shaded cooling centres for those unable to access air conditioning.
  • Flooding: New York City is improving coastal flood mapping, strengthening coastal defences and building smaller, strategically placed local storm surge barriers around the city.
  • Drought: São Paulo has set up reward schemes to incentivise citizens to use less water, whilst investing in the city’s pipeline system to reduce water leakage.
  • Urban food security: Paris plans to establish 33 hectares of urban agriculture within the city’s boundaries by 2020. By 2050, 25 percent of the city’s food supply will be produced in the Île-de-France region
  • Energy Supply: London is improving drainage infrastructure to ensure key infrastructure can withstand heavy flooding, whilst also encouraging decentralised energy supply to reduce the risk of blackouts if any one power source is damaged.
  • Extreme heat & poverty: Lima’s Barrio Mío programme created a poverty map of the city helping policy makers to focus resources on the most vulnerable and under-served areas where people are most exposed to heat risks.

Download the full report by clicking here.


Cover photo by Arto Marttinen on Unsplash
Event summary: Advancing TCFD guidance on physical climate risks and opportunities

Event summary: Advancing TCFD guidance on physical climate risks and opportunities

On 31st May 2018, the European Bank for Reconstruction and Development (EBRD), in partnership with the Global Centre of Excellence on Climate Adaptation (GCECA), held the conference Advancing TCFD Guidance on Physical Climate Risks and Opportunities. The EBRD welcomed the opportunity to host this event as a supporter of the Task Force on Climate-related Financial Disclosures (TCFD). The EBRD is the first multilateral development bank to officially join over 280 supporter organisations in becoming a supporter of the TCFD and of its recommendations on including climate-related information – both risks and opportunities – in financial disclosures.

The event launched the EBRD-GCECA report that builds on the TCFD recommendations and presents practical guidance for corporates looking to disclose their risks and opportunities with regard to physical climate impacts. This report is the result of a six-month dialogue between industry-led working groups composed of representatives of corporates, financial institutions and regulators.

In light of the report’s 18 recommendations, the conference facilitated discussion and reflections on the relevance of physical climate-related risks and opportunities to financial markets. Three panels, gathering corporations, banks, regulators, asset managers, rating agencies, and others were convened to discuss the practical implementation of physical climate-related disclosure metrics by corporations.

Download the flagship conference report and other conference materials.

Event summary

The conference was opened by Josué Tanaka, EBRD Managing Director, and Pierre Heilbronn, EBRD Vice President, who welcomed the audience and set the scene by highlighting EBRD’s long-standing commitment to financing the transition to a low-carbon and climate-resilient economy.

Henk Reinders, speaking on behalf of the Dutch Central Bank DNB, stressed the role that regulators must play regarding physical risk. Curtis Ravenel, Global Head of Sustainable Business and Finance at Bloomberg, presented TCFD recommendations related to physical climate risks and opportunities, and the challenges related to their eventual identification on balance sheets. Roelfien Kuijpers, Head of Responsible Investments and Strategic Relationships at DWS, encouraged investors to address physical climate disclosures through shareholder engagement to support a “just transition” that addresses the equity implications of repricing exposed assets. She also called on regulators to support this effort by requiring sector-based climate-related disclosure protocols and helping develop a new climate analytics industry.

The first panel ‘Advancing TCFD recommendations on physical climate risks and opportunities’ gathered the three chairs of the working groups who presented the EBRD-GCECA report’s findings. Murray Birt, DWS, stressed the importance of assessing climate risks over longer timeframes of assets and instruments, disclosing information on the location of critical facilities, providing detailed information on the financial impacts of recent extreme weather events and weather variability on facilities and value chains, as well as forecasting financial impacts of future physical climate risks. Simon Connell, Standard Chartered Bank, focused on opportunities, defined as increasing the resilience of existing assets to current and future physical climate risks, along with identifying new markets and product demand that may emerge as a result of shifting climate patterns. He highlighted the importance of identifying and disclosing physical climate-related opportunities at the segment level as well as wider co-benefits from climate resilience investments. Greg Lowe, Aon, explained that physical climate scenarios constitute a critical tool to ensure better capital allocation, as they provide useful views of plausible futures. As such, the analysis of physical climate scenarios requires an exploration of different GHG pathways and their impacts on climate and weather systems. Finally, Craig Davies, EBRD, presented the Bank’s efforts to support market transformation toward climate resilient economies by mobilising wider market action through developing new ways of sharing market information about physical climate change impacts.

The second panel ‘Managing physical climate risks and opportunities – experience to date’ brought together physical climate risk disclosure preparer and user perspectives, as Maersk, Citi, Bank of America Merrill Lynch, and Moody’s shared their experiences on the management of physical climate risks and opportunities. While their experiences to date varied, panellists all welcomed the TCFD framework as a means to bring physical climate risks and opportunities under deeper scrutiny in their organisations. The need for engagement emerged as an important theme from the panel. The interdependencies between financial institutions and corporates, and in turn between corporates and their supply chains, was said to require new relationships and engagement at multiple levels – both externally and internally. Another takeaway was the desire to strike the right balance between disclosures that are useful for financial institutions and for corporates’ strategic purposes. In these early stages of physical climate risk analysis and disclosure, what is truly ‘decision useful information’ is yet to be determined, though panellists maintained that the new EBRD-GCECA report goes a long way to provide guidance on this issue.

The third panel ‘How to include physical climate risks and opportunities in financial disclosure’ capped the event, bringing together financial regulators and government actors, as well as the voluntary disclosure perspective. Jean Boissinot, French Treasury, noted that while there is now room for further regulation on physical climate risk disclosures, regulators need to think carefully about it to ensure it results in information that is complementary, enabling information flows, and is aligned with other initiatives such as the TCFD. Mark Cornelius, Bank of England, discussed the Bank’s current information gathering initiative in the insurance and banking sectors and ensured the Bank and its regulatory functions are highly supportive of initiatives like TCFD that are by and for the market. Simon Messenger, Climate Disclosure Standards Board, commented that stronger regulation can help standardise physical climate-related disclosures. Antoine Begasse, European Commission, agreed that regulators have a role to play, but that regulation needs to be fit for purpose to generate comparable information from industry. In this light, the Commission is launching a public consultation on strengthening reporting requirements, and developing a taxonomy of adaptation (and mitigation) finance including metrics to be used in climate-related disclosures, to be integrated into regulation and to support climate-related reporting.

Closing remarks were provided by Roald Lapperre, Deputy Minister at the Netherlands Ministry of Infrastructure and Water Management, Curtis Ravenel of Bloomberg, and Josué Tanaka of EBRD. The host concluded that the disclosure process is happening, and that TCFD and the emerging EU sustainable finance approach provide useful frameworks. It was also recognised the tension between the need for consistency and the need for sector-specific metrics. Ultimately, there is high demand to translate awareness of physical climate risks and opportunities into metrics that can influence the decisions made by businesses and financial institutions.

Key Takeaways

  • Physical climate-related disclosures are part of an iterative process and constitute a learning exercise for corporations and financial institutions. They will need to include both quantitative and qualitative elements, to avoid the publication of commercially-sensitive data related to the provision of detailed climate risk information.
  • Disclosures and scenario analysis are not an end per se. The analysis of physical climate risks and opportunities should be about strategic analysis as much as it should be about disclosure.
  • There is a general need for better and more granular data provision on corporates’ facilities, their importance and their location. The information can come from universities and analytics firms as well as from better engagement between investors and clients.
  • Better disclosures of physical climate risks and opportunities will arise from a cooperative working process to ensure learning and awareness-raising between the following actors: banks (involving all teams including credit risk, industry teams and sustainability departments), investors asking questions to companies in which they invest, along with the latter assessing their whole value chain.
  • The long-term horizon is relevant for physical climate scenario analysis, as due diligence processes usually entail longer timeframes, and relationships with clients extend over the longer term.
  • The development of guidance and protocols on physical climate-related disclosures should be pursued. They should support market participants in increasing their climate risk awareness and the focus includes both acute and chronic physical climate risks. Regulators need to ensure that any new climate disclosure regulation results in information that is complementary, enabling information flows, and aligned with other initiatives such as TCFD.
  • MDBs have a role to play in ensuring that emerging economies are not left behind as new regulatory and market practices on climate-related disclosures emerge. They can support businesses and financial institutions in emerging markets to adopt and keep up with evolving best international practices on climate-related disclosures, for example through supporting skills transfer, capacity building and policy dialogue, as well as exploring the development of new financing instruments that include e.g. the appropriate use of concessionality and calibrated loan pricing.
  • The TCFD provides a useful framework for the analysis of climate risk and opportunities. Together with the EU sustainable finance approach, it is the push many corporates need to get started on their journey to uncover physical climate risks and opportunities. Growing awareness on physical climate risks and opportunities needs to translate into the development and use of robust metrics that inform better market decisions and the more rational allocation of capital in the light of information about physical climate change impacts.

Download the flagship conference report and other conference materials.


More on the initiative

The initiative was hosted by EBRD which also funds its technical secretariat. The GCECA provided a secondment to the technical secretariat. The technical secretariat was facilitated by Acclimatise, a specialist consulting company advising major corporates and financial institutions on climate risk and resilience, and by Four Twenty Seven, a firm providing market intelligence on the economics of climate change.

Participants involved in the expert working groups included: Agence Française de Développement, Allianz, APG Asset Management, AON, the Bank of England, Barclays, Blackrock, Bloomberg, BNP Paribas, Citi, Danone, the Dutch National Bank, DWS Deutsche AM, European Investment Bank, Lightsmith Group, Lloyds, Maersk, Meridiam Infrastructure, Moody’s, S&P Global Ratings, Shell, Siemens, Standard Chartered, USS and Zurich Alternative Asset Management.


Information about further updates and events will be posted on the website www.physicalclimaterisk.com. If you require further information about any of these activities, please contact physicalclimaterisk@ebrd.com.

The event attracted significant media attention and was reported by the New York Times, Reuters and Environmental Finance.

Low awareness of climate risks hampering resilience of critical infrastructure sectors claims new study

Low awareness of climate risks hampering resilience of critical infrastructure sectors claims new study

Low levels of awareness of climate risks and the availability of climate services are significant barriers to climate adaptation in the electricity sector, according to new research from Germany. However, the research also finds that the underlying market opportunity for climate services remains strong.

Damage to a critical infrastructure, its destruction or disruption by for example natural disasters, will have a significant negative impact on the security of the EU and the well-being of its citizens. Focussing on the German electricity sector, the report found that stakeholders in the sector claimed to need seasonal forecasts and decadal predictions, the latter aligning closely with energy companies’ time frames for strategic planning. However, despite this, there is currently a low level of demand for climate services from the sector.

The report found that four major barriers prevented the uptake of climate services:

  1. low awareness of the climate-related risks,
  2. low awareness of the benefits climate services can provide,
  3. mismatches between the required and the available timescales and spatial resolution of data and
  4. a lack of trust in the reliability of data.

In order to overcome these hurdles, the report recommends that considerable work needs to be done in the first instance to increase the visibility of the climate services industry and how it can contribute to the climate resilience of key sectors. It proposes that a ‘Climate Service Provider Store’ is created to provide information about where appropriate climate service providers are available.

Additionally, the case study recommends that work continues to ensure that seasonal and decadal forecast become ever-more accurate and that regional cooperation between industry networks and climate services providers are strengthened.

The case study was led by the non-profit research organization HZG under the MArket Research for a Climate Services Observatory (MARCO) programme of which Acclimatise is a proud partner. MARCO, a 2-year project coordinated by European Climate-KIC, hopes that research such as this will help to remove the barriers to the growth of the climate services industry across Europe.


Download the full case study “Critical Energy Infrastructureshere.

Download an infographic highlighting the key findings of the case study here.

Cover photo from pxhere (public domain).
Major new report on physical climate risk to financial sector released

Major new report on physical climate risk to financial sector released

Financial institutions should undertake comprehensive climate risk assessments and disclose material exposure to climate hazards such as flood risk, water stress, extreme heat, storms, and sea level rise, according to a new report released today by the European Bank for Reconstruction and Development. The report focusses specifically on physical climate risks to the financial sector and calls for firms to integrate climate impacts into investment decisions.

The report, published today at a conference hosted by EBRD and the Global Centre for Excellence on Climate Adaptation (GCECA), presents guidance and recommendations developed over the last year by industry-led working groups that include representatives from AFD Allianz, APG, Aon, Bank of England, Barclays, BlackRock, Bloomberg, BNP Paribas, Citi, Danone, DNB, DWS, The Lightsmith Group, Lloyds, Maersk, Meridiam Infrastructure, Moody’s, the OECD, S&P Global, Shell, Siemens, Standard Chartered, USS and Zurich Asset Management. An expert team led, by Acclimatise and Four Twenty Seven served as the secretariat to the working groups throughout the course of the meetings.

The report, Advancing TCFD guidance on physical climate risks and opportunities”, also recommends that firms investigate benefits from investing in resilience and opportunities to provide new products and services in response to market shifts. In order to do this, the report calls for organisations to use scenario analysis and incorporate long-term climate uncertainties into business planning and strategic decisions.

The report and the conference, respond to calls for strengthening financial stability in the face of climate change uncertainties, through the disclosure of climate-related market information.  This was the core message, delivered last summer, of the Task Force on Climate-Related Financial Disclosures (TCFD), initiated by the Financial Stability Board (FSB) in response to a call from the G20 economies.


The report is available on a dedicated website www.physicalclimaterisk.com, as are opinion pieces from heads of working groups and other leading experts.

Download the report’s executive summary here.

Cover photo by Ryan L.C. Quan/Wikimedia Commons (CC BY-SA 3.0): Looking downtown from Riverfront Ave in Calgary, during the Alberta floods 2013.
New approach puts theory of Climate-Resilient Water Management into practice on the ground

New approach puts theory of Climate-Resilient Water Management into practice on the ground

South Asia has 23.7% of the global population but only 4.6% of the world’s renewable water sources. Countries in the region already face considerable water management challenges due to high population density, poverty, and a high dependence on agriculture as a source of livelihood. Water resources in South Asia are overexploited and depleting fast, and institutions are struggling to manage and allocate water effectively. Climate change will only exacerbate existing problems through irregular rainfall patterns and increased incidence of floods and droughts.

Since 2014 the Action on Climate Today (ACT) programme has been actively working in five South Asian countries – Afghanistan, Bangladesh, India, Nepal and Pakistan – to help national and sub-national governments plan for, and manage, the impacts of climate change in the water sector. The ACT programme has championed a Climate-Resilient Water Management (CRWM) approach as a way of increasing the resilience of water systems on which billions of people rely.  The programme’s activities in this domain range from preparing urban flood management plans and adapting agriculture to increasing incidences to drought, to mainstreaming climate adaptation in water policies and estimating the future demand for water under different climate scenarios.

This framework is informed by these activities and within this water management interventions are sorted into three categories:

  1. Water resource management (including assessment, supply augmentation and demand management);
  2. Management of extreme events (floods and droughts); and,
  3. Creating an enabling environment for CRWM (including mainstreaming climate impacts in sectoral and cross-sectoral policies, among other governance instruments).

The framework distinguishes CRWM activities as different from conventional water management because they have to adhere to three main criteria:

  1. The best available climate information and data have to be used to go beyond business as usual;
  2. The principles of resilience, such as using ‘buffers’ and having flexibility and adaptability are systematically integrated; and,
  3. A sharp focus on reducing the vulnerability of poor and marginalised communities.

Government officials are already aware of unseasonal, more intense and frequent, instances of drought, monsoon rains and floods, and urgently seek ways to address the impacts citizens face. This presents an opportunity and entry point to engage policy makers in the CRWM process.


The full ACT learning paper “Climate-Resilient Water Management: An operational framework from South Asia” and a learning brief can be accessed here: http://www.acclimatise.uk.com/collaborations/action-on-climate-today/#ui-id-7

Listen to a 60-second audio abstract of the paper:

ACT (Action on Climate Today) is an initiative funded with UK aid from the UK government and managed by Oxford Policy Management (OPM).

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Cover photo by Milaap.org/Flickr (CC BY 2.0).