EU-MACS Coordinator: Prof. Adriaan Perrels,

The financial sector performs better with climate services

The financial sector has an increasing need to improve its understanding of how climate change risks and opportunities affect investments, for example, changes in productivity as a result of climate impacts may influence asset value. Insurance on the other hand is not only interested in changing risk levels, but also in opportunities for new risk sharing mechanisms.

In the financial sector, re-insurers and development banks (e.g. World Bank; IBRD) have already built up experience with the use of a large array of climate services (CS). Yet for most of the financial sector, e.g. commercial banks, equity funds, other private investment firms, and pension funds, the use of CS and interest in climate change impacts in general is a quite recent phenomenon. As such, there is significant potential for CS to support financial institutions that are only now starting to consider the integration of climate risks into their risk management processes and strategies.

Engaging stakeholders – Mutual benefits

Engaging with stakeholders of the financial sector will be essential to understand if and how the sector uses CS, how it acquires them, and if the current supply of CS products is appropriate for the sector.Providers of climate services for the financial sector should build lasting relations of trust as a basis for co-designing appropriate and evolving climate services for several types of users in the financial sector.

Exploring what are fitting CS products may take time. The Protocols offer some first help to this process. The main report (D2.1) about the climate sector illustrates how important the initiative of the Task Force on Climate-related Financial Disclosures (TFCD) is for setting the reporting development process in motion.