How can the financial sector protect their portfolios against climate change?

Published on
April 2, 2019

The physical impacts of climate change, such as flooding and extreme weather events, can have significant financial impact. Yet most companies are not accounting for physical climate risk, as The Economist pointed out recently. A new report provides insight to what investors need to make better investment decisions in a changing climate. Such information is highly needed.

The financial impact of the physical effects of climate change become more and more visible. Flooding damages facilities and disturb production chains, while extreme drought threatens agricultural production. “Investors are increasingly aware of climate risks, but often do not have access to public sources of information to analyse their exposure to physical climate risk,” according to Karianne de Bruin from Wageningen Environmental Research and lead-author of the report. “This report provides an overview of the information investors need to improve their understanding of the physical impacts of climate change, to measure their exposure to and to prepare and implement strategies that reduce the implications of these risks.”

Key needs of the financial sector

The report identifies three key needs for the financial sector:

  • In-house capacity building and training within financial institutions on physical climate risk to increase risk awareness;
  • Better tools and metrics to assess how the climate changes, including increases in flooding and extreme weather events, and associated physical impacts that affect assets in specific sectors markets and locations; and
  • Guidance and information to better engage with companies on climate-related risks.

Case study countries with unique perspectives

The report reflects on the needs of a range of different investor types, such as pension funds, asset managers, insurance providers, and banks across the three case study countries: France, the Netherlands, and Norway. “These countries are at the forefront of creating awareness and acting on the risks and opportunities of the physical impacts of climate change in the financial sector and provide unique perspectives”, said Karianne de Bruin.  


The report is repared within the framework of the ClimINVEST project. Wageningen Environmental Research is one of the project partners. In its next phase, ClimINVEST is collaborating with financial institutions in France, the Netherlands, and Norway in a series of science-practice labs. These labs aim to co-design transparent and publicly available information and methodologies based on open-access data. If you are a financial actor and interested in joining one of the science-practice labs, please contact Karianne de Bruin.

Green Climate Solutions

The international, scientific consortium behind the ClimINVEST project specializes in assessing climate impacts and developing tailored climate services and tools. The project is led by the Norwegian centre CICERO Climate Finance and part of the Green Climate Solutions programme of Wageningen Environmental Research. In this programme we develop user-driven solutions to climate challenges, such as climate information services, climate smart agriculture, climate resilient cities, climate adaptation and -mitigation, and energy transition.

Download the full report: