Financial institutions are underestimating their exposure to physical climate risks already materializing (e.g. see the bankruptcy of the Californian energy utility PG&E in early 2019), stressed ClimINVEST partners at a conference co-organized by I4CE – Institute for Climate Economics (ClimINVEST) and the French public investment bank Caisse des Dépôts et consignations (CDC) in Paris in April where the first results of the ClimINVEST project were discussed.
This is mainly due to a lack of data at the corporate level; the need to improve the methodologies developed by service providers; the need to reconcile scientific information on climate and decision frameworks at financial institutions typically in terms of time horizons. Depending on geographic areas, financial institutions are also asking for guidance to communicate internally on this issue.
The ClimINVEST partners highlighted that financial institutions can collaborate with climate scientists to co-design transparent and decision-relevant information (e.g. in the frame of ClimINVEST’s Science Practice Labs), as well as engage with corporates to stimulate communication of the relevant data.
Dialogue between climate scientists and the financial sector (so-called Science Practice Labs) on physical climate risk is ongoing in the framework of ClimINVEST in France, the Netherlands and Norway. In the Netherlands, asset managers, banks, real estate brokers, insurance companies, a credit-rating agency and the Dutch Central Bank participated in a Science Practice Lab organised by Wageningen Environmental Research and Climate Adaptation Services (CAS). Investors from Norway and Sweden are engaging with climate scientists from CICERO. The French ClimINVEST partner institutions I4CE - Institute for Climate Economics (I4CE), Carbone 4 and Météo France are working with French financial institutions.