The 2023 Climate Risk Landscape: Technical Supplement – United ... - UNEP Finance Initiative
The 2023 Climate Risk Landscape: Technical Supplement - United Nations Environment - Finance Initiative
Understanding the underlying assumptions and definitions used in climate risk assessments is vital for financial institutions integrating climate risk analyses into their operations. In order to help financial institutions accurately interpret the outcomes of climate risk analysis’ and make more informed decisions based on them, UNEP FI has developed a technical supplement to the 2023 Climate Risk Landscape Report.
This supplement presents a comprehensive analysis of climate risk assessment outcomes from multiple vendors, offering valuable insights into the impact of a transition to a low-carbon economy and climate risks on financial institutions’ portfolios. Based on a dummy portfolio, it showcases the importance of ensuring the long-term resilience of the portfolio and considering both transition and physical risks. It also identifies data availability as a significant challenge for vendors in delivering more precise analytics and looks into the various strategies employed to address data gaps.
To complement this analysis and help financial institutions navigate the expanding climate risk tool universe, UNEP FI’s Climate Risk and TCFD Programme has developed a series of resources.
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”