ClimINVEST: bringing scientists and investors together to co-design tailored information on climate change to support financial decisions

The impacts of physical climate change, such as changes in precipitation and temperature patterns and extreme events affect all sectors and are already placing a financial strain on companies, investors and other financial actors. Extreme climate events like flash floods and heat waves can damage facilities and disrupt supply chains. Longer term climate threats like sea level rise, water scarcity and rising temperatures can hurt agricultural yields and coastal real estate developments. The financial sector is paying increasingly more attention to the financial cost of climate change, underlying the need for transparency and precision in existing climate risk assessment tools that support financial decision making. The ClimINVEST project has identified a set of challenges financial actors face when managing physical climate risks and has taken steps to address these challenges. There is no established state-of-the-art method for assessing and reporting on physical climate risk, climate information reflects changes in the following decades while financial actors make decisions for the next few years. Moreover, climate risks are framed by local conditions whereas financial risk analysis is commonly conducted at sector or portfolio level and the climate data is not always readily available at this level of granularity. Climate service providers, such as private consultancy companies have developed tools to help financial actors assess their physical climate risks. However, service providers are often commercial entities, and thus, their methodologies often lack transparency. Using iterative workshops called science-practice labs (SPLs), the ClimINVEST project has brought scientists and investors from Norway, France and the Netherlands together with the aim to tackle these challenges. Through SPLs, existing methods (e.g. risk rating tools) have been disentangled to highlight the building blocks of physical climate risk. This process has increased transparency to the methodologies behind climate risk assessments and built capacity among financial actors to better understand the different elements that determine their assets' physical climate risks. Building on the feedback and discussions with the user group in SPLs, the ClimINVEST project has developed an interactive online platform that allows financial actors to assess their own exposure to most common climate hazards in Europe. The platform also presents case studies from different sectors to develop a better understanding of vulnerability aspects of physical climate risk. The platform provides user friendly climate indicators in the form of interactive maps, designed to address the most common hazards in Europe. The climate indicators are calculated based on state-of-the-art modelling efforts at a high resolution (~10 km x 10 km) to allow for local (asset level) as well as regional (portfolio level) analysis of exposure to climate hazards. The case studies available on the platform demonstrate the methods for physical climate risk assessments in different sectors and regions in Europe, at asset level as well as portfolio level. The interactive platform has received positive feedback from the user group in SPLs and was made publicly available in November 2020. Targeted dissemination and outreach was conducted for the remainder of the project, to increase visibility and accessibility to the platform. Supportive factsheets and a video presentation series are designed to enhance financial actors' understanding of physical climate risk and increase usability of the platform. These materials are intended to demonstrate the complexities of physical climate risk assessment and build financial decision makers' understanding of key physical climate risk calculation and management. In the final year, the ClimINVEST consortium finalized the suite of guidance materials (online data platform, fact sheets and videos) with continued, iterative feedback from investors and drafted final reports and publications. The final capstone report and the related capstone webinar, held on the 17th of February marked the end of the ClimINVEST project.

The three main impacts of the ClimINVEST project consist of 1) capacity building for investors on mitigation and adaptation to climate change, achieved through the science-practice labs (SPLs) conducted throughout the project and the numerous materials and data produced as a result of the SPLs; 2) capacity building for scientists on communicating information to financial decision makers, achieved through report and peer-reviewed publications on new methodologies and data; 3) improved communication between climate researchers and the financial community in Europe and globally through engagement in direct dialog between investors and scientists at SPLs and webinars with the user groups.

Investors seek to avoid unplanned and abrupt changes or disruptions to businesses or assets. The impacts of physical climate change can lead to production capacity disruptions or changes, capital cost impacts, resource and operational cost impacts, disruptions of operation e.g. from damaged facilities or communications, and shifts in demand for goods and services. In addition, investors face a transition risk resulting from the changes in policies, liability and technology to shift to a low-carbon future as targeted under the global Paris Agreement. Climate change risks also have an upside: there are opportunities for financial gain, for instance, in low emission technologies, climate resilient technologies or assets, or by considering ways to circumvent climate risks. The ClimINVEST project aims to bring scientists and investors together in a series of science practice labs to co-design tailored information on climate change to support financial decision making in the face of climate risks and opportunities. The project will develop climate services for a user group of institutional investors that have already shown active interest in improving information on physical climate risk to help guide their investment decisions.