Climate change
Workshop on Assessing the Climate Resilience of Finance - From physical risk to resilience alignment
There is an urgent need to adapt to growing climate change risks and mainstream climate resilience in all aspects of our economies and societies. The financial sector not only faces significant risks from climate change impacts, it also plays a crucial role in scaling up investments in adaptation solutions and redirecting finance flows to climate-resilient activities and assets, as reflected in Article 2.1c of the Paris Agreement. To track progress and inform policies and actions to increase the climate resilience of finance flows and stocks, major conceptual and data gaps need to be filled. In this context, while a range of stakeholders are developing indicators and analysis to assess physical climate risks to finance and underlying real-economy activities, assessments of adaptation strategies and alignment with climate change resilience policy objectives are still very limited.
The workshop will bring together experts and practitioners from the climate and financial policy communities, the financial sector, academia, data and rating providers, as well as civil society, to share knowledge on existing best practices to analyse physical climate risks in finance, and on further steps needed towards assessing adaptation opportunities and resilience alignment of the financial system. As such, the workshop places a strong focus on integrating climate adaptation concepts and goals in assessing the financial sector’s progress towards not only managing physical climate risks but also contributing to climate-resilient development.
The workshop is jointly organised by the OECD and the Network for Greening the Financial System (NGFS). It is part of a series of workshops contributing to ongoing OECD work relating to assessing progress towards Article 2.1c of the Paris Agreement. It also contributes to the work of the NGFS Expert Network on Data.
Agenda
Opening Session: Introduction on the urgent need for embedding climate change resilience in finance
Physical climate impacts are increasingly felt across societies and economic activities. This keynote will explain how such impacts will increase over the short and long term, and how tipping points and shifting distributions of the size and frequency of climate-related hazards may accelerate impacts. The keynote will further highlight the need for the financial sector to understand differences in exposure and vulnerability to economic activities, both to assess systemic risks from climate change, as well as to understand opportunities to make finance consistent with climate-resilient development.
- Sabine Mauderer, Chair of the NGFS and Member of the Executive Board of the Deutsche Bundesbank
- Jo Tyndall, Director of the OECD Environment Directorate
Session 1: Approaches and best practices to identify physical climate risks to investments and finance
Identifying physical climate risks to finance and investments is the first required step to manage climate-related financial risks and increase resilience. The session will discuss the range of existing methodologies, metrics and data to identify physical climate risks in finance. To do so, this session will cover the different steps of a climate risk assessment, from identifying climate hazard domains, to measuring exposure and vulnerability of real-economy assets and entities, to assessing financial risks from climate change at the level of financial assets, portfolios, institutions, and centres. The session will discuss strengths and limitations of existing and possible indicators, as well as consider potential ways forward for improved indicators to track and assess physical climate risks to investments and finance.
- Irene Heemskerk, Head of the Climate Change Centre at the European Central Bank
- Gladys Santis, Adaptation Officer at the Chilean Ministry of Environment
- Sean Carmody, Executive Director of the Insurance Division at the Australian Prudential Regulation Authority
- Boris Prahl, Executive Director of the Climate Risk Center/ESG Research at MSCI
- AXA (invited)
Session 2: Climate resilience policy goals and potential reference points for assessing the resilience alignment of finance
The Paris Agreement sets out clear temperature and emission goals for climate change mitigation, which has given rise to many net-zero targets, transition plans and alignment assessments in the private and financial sector, using global and sector-specific climate mitigation scenarios as reference points. For climate change adaptation, there is no globally agreed-upon goal, while policies and targets at sectoral, national and subnational levels remain relatively partial and scattered. Against this backdrop, this session will discuss types and examples of climate change adaptation and resilience policy goals, targets and reference points relevant for resilience-related assessments in finance.
- Nicola Ranger, Programme Lead at the University of Oxford and Director of the Resilient Planet Finance Lab
- Padraig Oliver, Programme Officer of the Climate Finance Unit at UNFCCC
- Anna Dimitrijevics, Deputy Head of Unit for Adaptation and Resilience to Climate Change in DG CLIMA at the European Commission
- World Bank (invited)
Session 3: Indicators of corporate and financial strategies to reduce physical climate risks and increase resilience alignment
Companies, investors, and financial institutions can take a range of actions to reduce physical climate risks and increase resilience in their activities and portfolios. This session will discuss typologies and examples of such actions, as well as indicators and data currently being collected on adaptation by these different actors. Based on this, the session will further highlight how information about these actions and indicators can contribute to informing assessments in finance of both financial risks and alignment with climate-resilient development.
- Mahesh Roy, Investor Strategies Programme Director at IIGCC
- Clare Everett, Senior Global Policy Manager at CDP
- Moody's RMS
Closing remarks: Way forward on putting the pieces together towards aligning finance with climate resilience goals
- Jean Boissinot, Head of Secretariat of the NGFS and Deputy Director at Banque de France
- Mathilde Mesnard, Deputy Director of the OECD Environment Directorate
Networking Cocktail
Registration
For virtual participation, please register via this Zoom form.
For in-person participation, contact researchcollaborative@oecd.org to express interest. Please note that there is limited capacity for onsite attendance.