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The roadmap presented in this document is a summary of the Playbook on “Physical Climate Risk Assessment for the Financial Sector” at the beginning of first para of summary. The Playbook, developed by CDRI and the Rockefeller Foundation, guides financial institutions (FIs) in assessing and managing physical climate risks. It emphasizes integrating climate risk into strategy, governance, and operations, especially in low- and middle-income countries. Using tools like the GIRI platform and the HEV framework, FIs can quantify risks from hazards like floods and cyclones.
The playbook outlines a four-phase assessment process and encourages scenario-based modelling. Real-world examples, such as Union Bank of India, showcase the successful integration of ESG frameworks. Despite challenges like data scarcity and a lack of standardization, climate risk assessments offer opportunities for green finance and resilience.
CDRI supports FIs through technical assistance, data platforms, and capacity building, aiming to bridge gaps and catalyze sustainable finance.
Key points
- Financial institutions must assess climate risks to protect investments effectively.
- GIRI platform helps quantify hazards across infrastructure sectors and regions.
- Climate risk integration improves governance, strategy, and financial decision-making.
- HEV framework estimates asset vulnerability and potential climate-related financial losses.
- Data gaps and a lack of standards hinder climate risk assessments.
- CDRI supports FIs with tools, training, and technical assistance.