氣候適應(yīng)和韌性融資指南-Guide for Adaptation and Resilience Finance 2024

April2024

[[Guidefor

Adaptation

andResilienceFinance]]

Foreword

Weneedcapitaltomoveintherightdirectionandto

mainstreamnaturalandclimatehazardresilienceintofinancialflows.Commercialbanksandprivateinvestorshavean

opportunitytoleadinmeetingtheadaptationchallengewithinEMDEsandglobally.Lendingandinvestmentinadaptation

shouldbeseenasbothacreditagainstcontingentdisaster

riskliabilityaswellasbeingapotentialnewpathtoprofit.I

encouragethebankingandinvestmentcommunitytousethisGuideasakeyresourcewhenconsideringhowandwheretoinvestmoreproactivelyandambitiouslyinaresilientfuture.”

StandardChartered,KPMGandtheUnitedNationsOfficefor

DisasterRiskReduction(UNDRR),withcontributionsfrommorethan20additionalorganisations,havecollaboratedtodeveloptheGuideforAdaptationandResilienceFinance.

“Theimperativetoinvestinresilienceisundeniable.Dailynewsreportsshowcasehowdisastersareerasingdevelopmentgainsworldwide.Breakingthiscycleofdisastersdemandsinvestment.Thisisurgent,especiallyasclimatechangeisincreasingthe

frequencyandintensityofhazards.

DavidGreenall

GlobalManagingDirector–ClimateRisk,Decarbonization,Nature&Adaptation,

KPMGInternational

Whilegovernmentactionsarecritical,thefinancecommunitymustplayagreaterroleinadvancingfinancialsolutionsfor

adaptationandresilience.ThisGuideaimstosupportthisobjectivebyprovidingfurtherclarityonwhatconstitutesadaptationandresilience-buildinginvestment.

“Weneedtoembedadaptationandresilienceinto

financialdecision-makingtomanagerisksandidentifynewopportunities,giventhateverydollarspentonadaptation

couldgenerateuptoUSD12ofeconomicbenefitthisdecade.1

Recognisingthepotentialofadaptationandresilienceas

aninvestableassetclassiscriticalifwewanttoattractand

unlockfurtherinvestmentfromcommercialbanks,private

Iurgebanksandotherfinancialactorstotakeadvantageof

thisguidancetodevelopfinancialproducts,suchasadaptionandresilienceloansandbonds,thatcanmobiliseprivate

capital.Ialsoencouragethefinancialcommunitytousethis

opportunitytosettargetsforthemselvesintermsofinvestmentportfoliosallocatedtotheseobjectives.”

SujitKumarMohanty

ChiefofBranch,IntergovernmentalProcesses,InteragencyCooperationandPartnerships,

UnitedNationsOfficeforDisasterRiskReduction(UNDRR)

equity,andassetmanagers.Marketclarityonwhatqualifies

asanadaptation-alignedinvestmentcomesthroughcoherent,consistent,andstandardiseddefinitionsandterminology.

“Climatechangeistransformingtheriskprofileofnations,

communities,naturalsystems,andbusinesses.TheUAE

FrameworkforGlobalClimateResiliencerecognisesthat

adaptationisessentialforprotectinglives,livelihoods,and

economies.Implementingmeasuresthatbothdirectlyand

I’mdelightedthatincreatingthisGuide-weareabletoprovideconfidencetoinvestorslookingtoallocatecapital

toadaptationprojects,aswellastocompaniesseekingto

raisecapitalforadaptationandresilienceproducts,solutions,orotherinvestmentopportunities.”

MarisaDrew

ChiefSustainabilityOfficer,StandardChartered

indirectlyreducevulnerabilityandbolsterresiliencetoclimateandothernaturalhazardsiscritical.Thereneedstobearapidmovetowardsadaptationandresilienceaction.

Thisurgencyisparticularlypronouncedforvulnerablegroups

andpopulationsinemergingmarketsanddeveloping

economies.Theseeconomieshaveadisproportionateriskofexposuretothenegativeeffectsofrisingtemperaturesandextremeweather,andinmanycasesfewerresourcesandlesscapacitytorespond.

1StandardCharteredBank(2022),AdaptationEconomy,

/en/campaigns/adaptation-economy/

2GuideforAdaptationandResilienceFinance

Contributors

ThisGuidebenefitedfromextensivediscussionsandconsultationswithabroadrangeofstakeholders,whoprovidedvaluable

inputsandsuggestions.Theconclusionsandviewsarethoseoftheauthorsanddonotnecessarilyrepresentthoseoftheentitieslistedbelow.

PrimaryReviewGroup

IIGCC

DipeekaRamgolam,SustainabilityLead-

PaulSmith,Secretariat,Adaptation&

NicolaRanger,Director,ResilientPlanet

DanielleBoyd,HeadofClimateStrategy

ESG&Climate,TheMauritiusCommercialBank

ResilienceInvestorsCollaborative&Adaptation

FinanceLab,EnvironmentalChangeInstitute,

Implementation

Ltd(MCB)Lead,UNEPFIUniversityofOxfordMaheshRoy,Director,InvestorStrategies

Programme

WorldEconomicForum

EricWhite,Head,ClimateAdaptation,WorldEconomicForum

SecondaryReviewGroup

GemmaLawrence-Pardew,Headof

ValeriaRamundoOrlando,ManagingPartner,

TamNguyen,GlobalHeadofImpact&

SharonCleary,HeadofInvestorRelationsand

Sustainability,LoanMarketAssociation(LMA)

GreensquareVentures

presidentof,BechtelCorporation

Communications,EquilibriumClimateCapital

KateHughes,CEO–ResilientWaterAccelerator,WaterAid

ShargiilBashir,EVP&ChiefSustainability

AmitProthi,DirectorGeneral,Coalitionfor

NathanialMatthews,ChiefExecutiveOfficer,

Officer,FirstAbuDhabiBank(FAB)

DisasterResilientInfrastructure(CDRI)

GlobalResiliencePartnership

MaysamRawashdeh,HeadofESGAssessment

AgatheNougaret,InternationalTechnicalExpert

andNetZeroTransition,FirstAbuDhabiBank

inInfrastructureClimateChangeAdaptation,

(FAB)

CoalitionforDisasterResilientInfrastructure(CDRI)RajVikgramSingh,SeniorSpecialist,DRF,CoalitionforDisasterResilientInfrastructure(CDRI)

GillianMarcelle,PhD,CEO,ResilienceCapitalVentures

SabrinaNagel,AdaptationandResilienceFinanceLead,ClimateChampions

SabrinaNagel,AdaptationandResilienceFinanceLead,ClimateChampions

SabrinaNagel,SeniorAdvisorGlobalPolicy&Finance,AdrienneArsht-Rockefeller

FoundationResilienceCenter,AtlanticCouncil

swissRe

corporatesolutions

RaffaeleDellaCroce,Co-DirectorSingapore

DevpriyaMisra,HeadCustomerManagement

IvaDetelinova,SeniorAdvisor-Climate

ArghyaSinhaRoy,PrincipalClimateChange

GreenFinanceCentreandAdvanced

APAC

Adaptation&Resilience,theAfrican

Specialist(ClimateChangeAdaptation)

ResearchFellowCentreforClimateFinance

RodolpheBocquet,HeadSustainability

ClimateFoundation

ClimateChange,ResilienceandEnvironment

&Investment,ImperialCollegeBusinessSchool

Solutions

Cluster,ClimateChangeandSustainable

AnnemarieBüttner,LeadClimateRisk

DevelopmentDepartment,AsianDevelopment

Solutions

Bank

SavinaCarluccio,ExecutiveDirector,

IngridHolmes,ExecutiveDirector,

UjalaQadir,Director,StrategicProgrammes,

KarlSchultz,FounderandToolsInnovator,

InternationalCoalitionforSustainable

GreenFinanceInstitute

ClimateBondsInitiative

ClimateAdaptationWorks

Infrastructure(ICSI)

UNDRRInvestmentAdvisoryBoard

USAID

JonathanCook,SeniorResilienceandClimateAdaptationAdvisor,BureauforResilience,

Environment,andFoodSecurity,

UnitedStatesAgencyforInternationalDevelopment(USAID)

OECD

MichaelMullan,SeniorPolicyAnalyst,OECD

AfricanDevelopmentBank(AfDB)

GarethPhillips,ChiefClimateChangeandGreenOfficer,AfricanDevelopmentBank

BritishInternational

Rabobank

ING

BankofAmerica

Investment(BII)

BoukedeVries,AdvisortotheBoardonPublic

DilanYildirim,SeniorConsultant,Global

ChiaraTrabacchi,Manager,ClimateChange,BritishInternationalInvestmentplc

Affairs,Rabobank

Sustainability,ING

3GuideforAdaptationandResilienceFinance

Inthisreport

05Executivesummary

06Respondingtoaglobalcalltoaction

06ObjectiveoftheGuideforAdaptationandResilienceFinance

06Apracticalguideforthemarkettomobilisefinance

07Introduction

07Everyregionisfacingincreasednaturalhazards

08Addressingtheadaptationandresiliencefinancegap

09Theeconomicopportunityinadaptationandresiliencefinance

11Investmentcriteria

12Substantialcontributiontoadaptationandresilience

13Avoidanceofmaladaptationandsignificantharmtosustainabilityobjectives

15Consistentwithlocallyand/ornationallydefinedadaptationandresiliencestrategies

15Enhanceadaptationandresilienceinkeyvulnerability

areas

17Adaptationandresilienceinvestmentframework

18Indicativeeligibleinvestments(Useofproceeds)

29Projectselection

29Managementofproceeds

29Impactreporting

29Measuringadaptationandresilienceimpact

33Annex1.Referenceliterature

36Annex2.Referenceliteraturecontinued

37Acknowledgments

4GuideforAdaptationandResilienceFinance

[[Executive

summary]]

Executivesummary

Respondingtoaglobalcalltoaction

AtCOP28inDubai,theUAEFrameworkforGlobalClimate

Resiliencerecognisedthatthecurrentlevelsoffinancefor

adaptationwereinsufficientandcalledforlargerandmore

flexiblefinancingfromadiverserangeofpublic,private,and

philanthropicsources.ACallforCollaborationwasissuedbyabroadstakeholdergroup,withtheobjectiveofacceleratingthemobilisationofprivatefinanceforadaptationandresilience.

Tosupportthisaim,theCallaskedforprivatefinanceand

supportingpartnersto,“ideate,pilotandpromoteexisting

frameworksandtaxonomiestoencourageassessmentof

physicalclimaterisksandresilience,protectionfromphysicalclimaterisksandinvestmentsintoadaptationandresilience.”2

Inresponsetothiscall,StandardChartered,KPMGandthe

UnitedNationsOfficeforDisasterRiskReduction(UNDRR),

withcontributionsfrommorethan20additionalorganisations,(referto“Contributors”sectiononPage3)havecollaboratedtodeveloptheGuideforAdaptationandResilienceFinance(“theGuide”).

ObjectiveoftheGuideforAdaptationandResilienceFinance

TheGuideaimstounlockprivatesectorcapitalflowsinto

adaptationandresilienceinemergingmarkets.Itsetsout,

forthefirsttime,anindicativelistofadaptationandresilienceactivitiesalongsideguidanceontheprocessforassessment

ofthis.TheGuideaimstoacceleratethedevelopmentand

structuringoffinancialproductsfocusedonadaptationand

resilience,suchasloans,bonds,privateplacements,structurednotes,lettersofcredit,anddeposits.

Apracticalguideforthemarkettomobilisefinance

TheGuideisapracticaltoolandsetsoutablueprintfor

financialmarketparticipantsthatbringsclarityto-and

simplifies-thedecision-makingprocesswhenfinancing

adaptationandresilience.Itconsidersbothclimate-related

(includingmeteorologicalandhydrologicalevents)andnon-climate-relatednaturalhazards(suchasgeophysicalevents).

TheGuidefocusesonactivitiesthatcanbefinancedthroughprivatelendingandinvestmentarrangements,andthrough

publicmarketcapitalraising.Itincludesassessmentstepsandaccompanyingguidancecoveringconsiderationofsubstantialcontributiontoadaptationandresilienceobjectives,riskof

potentialformaladaptation,avoidanceofsignificantharmtoothersustainabilityobjectives,andconsistencywithnationalandlocaladaptationandresiliencestrategies.

TheGuideprovidesalistofeligiblefinanceablethemesand

activities,andidentifiesassociatedenvironmentalandsocialco-benefits,withtheambitionofstandardisingunderstandingofadaptationandresilienceopportunitiesforfinancial

institutions.Thelistisnotexhaustiveandfocusesprimarilyonactivitieswhichaddresstheneedsofemergingmarketsanddevelopingeconomiesandarefinanceablebythe

privatesector.

Primarily,theGuidewasdesignedforFinancialInstitutions

(bythiswemeancommercialbanks,developmentfinance

institutions,andinvestors).However,ithasabroadapplicabilityforotherfinancialinstitutionsandinvestorsengagingtheir

clientsinfinancingandinvestmentopportunitiesrelatedtonaturalhazardadaptationandresilience,includingprivatelendingandinvestmentarrangementsandpublicmarketcapitalraising.3

Similarly,althoughfocusedontheneedsofemergingmarketsanddevelopingeconomiesduetothestarkandincreasing

needforadaptationfinanceinthesemarkets,thethemes

andactivitiesincludedwithinhaverelevanceforfast-growinganddevelopedmarkets,withadditionalscrutinyaround

considerationofsubstantialcontribution.Thisisadynamictoolforthemarketwhichwillcontinuetoevolveasfinancingadaptationandresiliencegrowsandthemarketdevelops.

Climatechangeadaptationisrecognisedasaneligibleprojectcategorybyvariousvoluntaryprocessguidelines

(e.g.GreenBondPrinciplesandGreenLoanPrinciples)and

withinnationalandregionaltaxonomies(e.g.EUSustainableFinanceTaxonomy;Singapore-AsiaTaxonomyforSustainableFinance,ASEANTaxonomyforSustainableFinanceandthe

CommonFrameworkofSustainableFinanceTaxonomiesfor

LatinAmericaandtheCaribbean).However,theseguidelines

andstandardsaddressadaptationatahigh-level,wherethereisapressingneedformoredetailedguidancetospecifyeligibleactivitieswithinthesecategoriesandtodefinepotentialco-

benefitsforpeopleandtheplanet.

TheGuideprovidesanindicativelistoffinanceableadaptationandresiliencethemesandactivities,

formingaclassificationframework,andoutlinesastep-by-stepprocessthatprovidesaccompanyingguidancesofinancialinstitutionscan:

?Identifytheeligibleuseofproceedsforfinancingandinvestmentopportunitiesinadaptationandresilienceinemergingmarketsanddevelopingeconomies;4

?Maptheco-benefitsoftheseinvestmentsbeyondclimateadaptation;

?Screeninvestmentopportunitiesforsubstantialcontributionandriskofmaladaptationaswell

asconsiderpotentialforsignificantharmto

othersustainabilityobjectivesthroughreferencetointernationalstandardsonsocialand

environmentalsafeguards;

?Considerhowtheimpactoftheseinvestmentscouldbemeasuredandreportedon,includingprovidinganindicativelistofimpactindicators.

2AdrienneArsht-RockefellerFoundationResilienceCentre(2023),CallforCollaboration:Enhancingtheenablingenvironmenttoacceleratethemobilisationofprivatefinanceforadaptationandresilience,

CallforCollaboration(

)

3WhilethetargetaudienceoftheGuideiscommercialbanksandbroaderfinancialinstitutionsandactors,theroleofgovernment,centralbanks,andthecapacityoflocalactorsiscriticaltoenableaccelerateadaptationfinancing

4WhilethefocusoftheGuideisonacceleratingflowsofadaptationfinancetoemergingmarketsanddevelopingeconomies,italsohasbroaderapplicabilitytoadevelopedcountrycontext

6GuideforAdaptationandResilienceFinance

Introduction

Everyregionisfacingincreasednaturalhazards

Extremeweatherandclimate-relatednaturalhazardshaveincreasedinfrequencyandintensityoverthelastdecade,

negativelyimpactingcommunities,businesses,financial

andnaturalassets.Economiclossesresultingfromnatural

hazardeventsin2023areestimatedtobeUSD250billion.5

However,thetruetollofclimate-relateddisasterswillbe

muchhigher,asanumberimpactsarenotincludedintheseestimates,suchastheimpactofslow-onsetandsmall-scaleevents,theknock-oneffectsofbrokensupplychains,lossesinproductivity,compromisedphysicalandmentalhealth,

andtheenduringimpactsofdisruptededucation.6

Exposureandvulnerabilitytosuchhazards,alongwiththeir

subsequentimpacts,arebeingamplifiedbyacombination

offactorsandinteractingriskdrivers.Theseincludepopulationgrowthandpoorlyplannedurbandevelopment,weak

governance,povertyandinequality,lossofbiodiversity,regionalconflicts,environmentaldegradation,massmigrationand

economicinstability.Climatechange7isexacerbatingandcompoundingthesefactors,resultinginincreasedrisksandlossesandmakingresilienceeffortshardertoimplement.

Globally,everyregionoftheworldfacesnaturalhazard

impactsandrisks,buttheimpactsandresponsechallengesareparticularlyacuteinemergingmarketsanddevelopingeconomies(EMDEs),especiallyintheLeastDeveloped

Countries(LDCs)ofAsia,Africa,theMiddleEast,andSmall

IslandDevelopingStates(SIDS).Thisisduetocountrieshavingbothlowadaptivecapacityandhighvulnerability.8

Table1.Definitionofnaturalhazards

Ahazardisaprocess,phenomenonorhumanactivity

thatmaycauselossoflife,injuryorotherhealthimpacts,propertydamage,socialandeconomicdisruptionor

environmentaldegradation.

Whileabroadrangeofhazardsexists,thisGuideis

concernedwithnaturalhazardsi.e.thosebelongingto

thefollowingthreecategoriesasdefinedbytheUNDRR:9

1.Meteorologicalandhydrological:Extremeweather

/climateeventssuchasdrought,heat(extreme

heat,heatwave),cold,precipitation(riverineand

pluvialflooding),wind(tornadoes,tropicalstorms),

snowandice,andcoastal/oceanic(stormsurge,

oceanheatwave).Slowonsetprocessessuchas

heat(increasedaveragetemperature,wetbulb

temperature),increasedaridity,variableprecipitation,decreasingglaciers/snowcover/permafrost,and

coastal/oceanic(sealevelrisk,oceanwarming,acidification).

2.Geological/geophysical:Rapidonseteventssuchasearthquakes,landslides,tsunamis,andvolcanicactivity.

3.Environmental:Slowonsetprocessessuchas

biodiversityandecosystemloss,deforestation,soildegradation,desertification,landsalination,lossofpermafrostandseaice,anddisturbance(wildfire,forestdieback,eutrophication).

Hazardsmaybesingle,sequentialorcombinedinboththeiroriginsandtheireffects.

Climatechangeisconsideredanunderlyingdriverof

riskformeteorological,hydrologicalandenvironmentalhazardsandcanexacerbatetheimpactsofthese

hazardsaswellasthosewhicharegeological/

geophysical.Climaterelatedhazardsimpactnatural

assets,anddegradationofnaturalassetsinturnincreasesthefrequencyandimpactofclimate-relatedhazards.

Climatechangeisalteringthefrequencyandintensityofhazardevents,affectingvulnerability,andchangingexposurepatterns.

5

/en/company/media-relations/media-information-and-corporate-news/media-information/2024/natural-disaster-figures-2023.html

6

/explainer/uncounted-costs-of-disasters-2023

7IPCC(2022),ClimateChange2022:Impacts,AdaptationandVulnerability,

https://www.ipcc.ch/report/ar6/wg2/

8TheIPCCAR6reportdefinesAdaptiveCapacityas“theabilityofsystems,institutions,humansandotherorganismstoadjusttopotentialdamage,totakeadvantageofopportunities,ortorespondto

consequences,”andVulnerabilityas“thepropensityorpredispositiontobeadverselyaffected.Vulnerabilityencompassesavarietyofconceptsandelementsincludingsensitivityorsusceptibilitytoharmandlackofcapacitytocopeandadapt.”

9

/publication/hazard-definition-and-classification-review-technical-report

7GuideforAdaptationandResilienceFinance

Evenatlevelsunder1.5°Cofglobalheating,thehealth-relatedrisksofclimatechangearerapidlygrowing,andalready

costinglivesandlivelihoods.10Healthsystemsareincreasingly

strained,andfailuretosupportequitableadaptationhasleftpopulationsunprotectedinthefaceofincreased

climatehazards.

Addressingtheadaptationandresiliencefinancegap

Theeconomiccostsofnaturalhazardareclear,evenifthe

worldsucceedsinlimitingtemperaturerisestotheParis

Agreementgoals,theworldwillfacebillionsindamagesandlosteconomicgrowthby2030,increasingtotrillionsby2050.11

Adaptationandresiliencefinance,whichshouldbe

acceleratingtocatchupwithrisingnaturalhazardimpacts,continuestofallshortdespiteclarityonadaptationmeasuresneeded,thebenefitstheyprovide,andclarityonwheretheyareneeded.

Today,lessthan10percentofallclimatefinanceisallocatedforadaptation.12Theannualclimateadaptationfinancing

gapindevelopingcountriesisbetweenUSD194-366billion,

approximately10-18timesmorethancurrentfinancingflows.13ThisgapisexpectedtoincreasetoUSD315-565billionby

2050.14Further,developmentfinancingfordisasterriskreductionasawholehasbarelyincreasedoverthepast

30years.15

Table2.Definitionofadaptationandresilience

Adaptationandresiliencearesimilarconcepts–butnotexactsubstitutesforeachother-thatwhentakentogetheraimtomanageandminimiserisk,reduce

vulnerabilityandenhancethecapacityofsystems

(whethersocial,economicorenvironmental)todeal

withtheimpactsofnaturalhazardsandclimatechange.ThisGuideusestheSendaiFrameworkforDisasterRisk

Reduction(“Sendai”)definitionsofthetwoconceptsasfollows:16

Adaptation:theprocessofadjustingpractices,systemsandstructurestomoderatepotentialdamageandcopewiththeconsequencesofnaturalandclimate-related

hazards.Thisincludesadjustingsocio-economicandenvironmentalpracticestolimitdamage.

Resilience:theabilityofasystem,communityorsocietyexposedtohazardstoresist,absorb,accommodate,

adaptto,transformandrecoverfromtheeffectsof

ahazardinatimelyandefficientmanner,including

thepreservationandrestorationofitsessentialbasic

structuresandfunctionsthroughriskmanagement.

Theterms“adaptationandresilience”areusedinthis

GuidetorefertoadaptationandresiliencetothenaturalhazardsidentifiedinTable1.

AdaptationandresiliencefinanceasusedthroughoutthisGuideisconsideredtobeanyfinancialservice

whichisprovidedtoanentitytoenableadaptationandenhanceresiliencewithinthatentity’sassets,operations,customers,supplychain,thecommunitiesinwhichtheyoperate,orwithintheequivalentoftheenduserofthe

product/servicetheyprovide.

10Aswearenotontrackfor1.5°Cofglobalwarming,thebenefitsofactioncouldbegreater

11StandardCharteredBank(2022),AdaptationEconomy,

/en/campaigns/adaptation-economy/

;Note:EveniftheworldsucceedsagainsttheoddsinlimitingtemperaturerisestotheParisagreementgoals,the10marketsidentifiedinSCB’sAdaptationEconomyreportcouldbefacinganestimatedcostofUSD377billionindamagesandlosteconomicgrowthby2030.ThisrisestoUSD1.4trillionbetweennowand2050

12ClimatePolicyInitiative(2023),GlobalLandscapeofClimateFinance,

/publication/global-landscape-of-climate-finance-2023/

13UNEP(2023),AdaptationGapReport,

/resources/adaptation-gap-report-2023

14UNEP(2023),AdaptationGapReport,

/resources/adaptation-gap-report-2023

15UNDRR(2023),TheReportoftheMidtermReviewoftheImplementationoftheSendaiFrameworkforDisasterRiskReduction2015-2030,

/publication/report-midterm-

review-implementation-sendai-framework-disaster-risk-reduction-2015-2030

16UNDRR(2015),SendaiFrameworkforDisasterRiskReduction2015-2030,

/publication/sendai-framework-disaster-risk-reduction-2015-2030

8GuideforAdaptationandResilienceFinance

Theeconomicopportunityinadaptationandresiliencefinance

Investmentinnaturalhazardadaptationandresilienceextendsbeyondavoidinglossanddamage.Researchconductedby

StandardChartered,publishedintheAdaptationEconomy

Report,foundthatforeveryUSD1spentonadaptationthis

decade,aneconomicbenefitofUSD12couldbegenerated.17

Thereporthighlightsthesignificanteconomicpay-offofearlyactiontowardadaptationandthepotentialgainsforinvestors.

Thissignificanteconomicopportunityshouldacttoincentivisethemarket,especiallywhencomparedtothecostofinaction.Aggregatingovertheperiod2025-2100,thetotalcostof

inactionisestimatedatUSD1,266trillion,thatis,thedifference

inlossesunderabusiness-as-usualscenarioandthoseincurredwithina1.5°Cpathway.Thisfigureis,however,likelytobea

significantunderestimate.18

Fundingflowsfornaturalhazardandclimateadaptationcomefrompublic,private,andalternativecapitalproviders,often

throughcombinedinvestments.19Publicfinancerepresentsthemostsignificantshareofthecapitalallocation.Privatecapitalproviders–includingbanks,institutionalinvestors,andprivateequity–contributejust2percentofthetrackedfinancefor

climateadaptation.20

Arangeofbarriershavehistoricallylimitedprivatefinance

flowsandreducedtheperceivedattractivenessofinvestinginadaptationandresilience(asdetailedinTable3).Toclosethefinancegapandmeettheneedsofnaturalhazardadaptationandresilience,anincreaseinprivateinvestmentisessential.

Financialinstitutionsandinvestors,especiallythoseoperatinginemergingmarketsanddevelopingeconomies(EMDEs),areincreasinglyrecognisingtheirroleindirectingcapitaltowardsthemarketsthatareparticularlyvulnerabletotheimpactsofnaturalhazards.

Table3.Realandperceivedbarrierstoprivatefinancefornaturalhazardadaptationandresilience21

PerceivedbarriersRealbarriers

?Short-termperspectivesandmarketinefficienciesthataffecttheaccuratepricingandadequateconsiderationofnaturalhazardandclimate-relatedrisks.

?Alackofcountry-specificdataandasset-leveldataonnaturalhazardandclimateriskandvulnerabilitywhichimpedesinformedinvestmentdecisions.

?Theprivatesector’schallengeinunderstandingtheenvironmentalandsocialbenefitsofinvestingin

adaptationandresilience.23

?Informationdisparitiesandgapsinknowledge,includingunderstandingtheextentofpotentialenvironmental

andsocialbenefits,whichinfluencetheassessmentofpublic-privateinvestmentreturnsanddecision-makingprocesses.

?Inactionbyfinancialregulatorsandpolicymakersto

incorporaten