Climate risks are economic risks: Adaptation outcomes for Financial Institutions is a resource developed to assist financial institutions in understanding and tracking progress regarding climate adaptation and resilience. The tool focuses on the materiality of physical climate risks and how they impact financial portfolio performance. It serves as a framework for assessing the quality and effectiveness of adaptation finance in a global context.

Organisation behind the tool

Climate Policy Initiative (CPI) is the organisation responsible for this resource. CPI is an analytical body that works to improve energy and land use policies globally, with a specific focus on the effectiveness of climate finance.

What the tool does

The tool provides a framework for evaluating adaptation finance through several key functions:

• Analyses the quality and impact of finance directed towards climate adaptation.
• Tracks the progress of financial institutions in managing physical climate risks.
• Provides methodologies for measuring adaptation and resilience outcomes within financial portfolios.
• Offers insights into global trends regarding the mobilisation of adaptation capital.

Target audience

The primary audience includes financial institutions, institutional investors, and asset managers. It is also highly relevant for policymakers, climate finance researchers, and ESG analysts seeking to standardise adaptation metrics.

Relevance to finance professionals

• Risk assessment – Enhances the ability to identify and quantify physical climate risks that could affect asset valuations and loan repayments.
• ESG analysis – Provides a structured approach for reporting on adaptation finance under international disclosure frameworks.
• Investment context – Helps identify opportunities for investing in resilient infrastructure and climate-adaptive business models.
• Market insights – Offers data on the current state of adaptation finance to support long-term strategic planning and capital allocation.