Physical Climate Risks and the Financial Sector - Synthesis of Investors’ Climate Information Needs

While investors are paying more attention to climate change, there is a lack of granular data designed to support financial decisions. Climate services can provide improved indicators and metrics to help investors better manage physical climate risks. This chapter presents the results of the ERA4CS-JPI Climate project ClimINVEST aimed to co-design tailored information on climate change. It provides an overview of investors’ needs and information gaps on the physical impact of climate change. It identifies what information sources financial actors rely on and what challenges they face in decision-making incorporating available climate change information while taking into account diverse investor mandates and risk management approaches. Three unique geographical cases are presented, both on commonalities and differences, namely France, the Netherlands and Norway. In France, the 2015 Energy Transition for Green Growth Act (Article 173-VI) requires institutional investors to report on their integration of climate-related risks in their investment policies. In the Netherlands, the Dutch Central Bank and financial institutions are challenged to deal with potential flood risks from more frequent precipitation and sea level rise. In Norway, actors such as Finance Norway and the Norwegian government are assessing the risks from physical impacts of climate change on the Norwegian economy.