Background and context

This Toolkit addresses a key barrier to scaling climate adaptation and resilience (A&R) finance: the difficulty of measuring and demonstrating impact. Unlike mitigation, adaptation lacks common metrics, involves long time horizons, and faces attribution and data constraints, particularly in climate-vulnerable regions. The report positions impact measurement as essential for credit risk management, capital allocation, regulatory compliance, and stakeholder credibility across banks, insurers, asset managers, and development finance institutions (DFIs).

The toolkit’s principles

The framework distinguishes between results indicators (outputs, outcomes, impacts) and practice indicators (institutional capacity and processes). It emphasises impact pathways linking financing to delivery, performance under climate stress, and ultimate benefits. The Toolkit prioritises outputs and outcomes, where attribution is strongest, while treating impacts as contributory rather than solely attributable. All indicators are designed to be decision-useful, explicitly linked to actions such as pricing, covenants, underwriting, allocation, or engagement.

Prioritisation and scoping

Institutions are advised to focus measurement where it adds the most value, using three filters: material climate exposure, priority geographies and national alignment (e.g. National Adaptation Plans), and decision-usefulness. The Toolkit recommends starting with one or two high-priority segments rather than portfolio-wide coverage. Scoping should define geography, clients, hazards, baselines, output and outcome windows, exclusions, and decision review points to ensure proportionality and feasibility.

Results indicators: Institution-specific modules

Commercial banks

Banks are guided to link A&R performance to credit decisions, particularly in sustainability-linked loans, project finance, and concentrated exposures. Output indicators include commissioning of resilience measures, while outcome indicators focus on operational downtime, recovery time, and loss experience during hazard periods. Evidence is used to adjust pricing, covenants, tenors, or exposure limits. Impact evidence is primarily narrative and not used for pricing.

Development finance institutions

DFIs integrate impact measurement throughout the project lifecycle, from ex-ante appraisal to post-completion evaluation. Outputs trigger disbursements, outcomes inform scale-up or remediation, and impacts support board and donor reporting. The Toolkit recommends independent evaluations and clear counterfactuals, typically 3–5 years post-completion.

Insurance and reinsurance companies

Insurers validate adaptation benefits through claims and loss data. Outputs relate to verified risk controls and programme uptake, outcomes to loss ratios, claim severity, and recovery speed, and impacts to protection gaps and service continuity. Evidence informs premiums, underwriting terms, reinsurance structures, and product design, using matched cohorts and multi-year hazard data.

Asset managers and asset owners

Asset managers rely on issuer disclosure and engagement. Outputs track delivery of resilience measures and governance, outcomes assess operational and financial performance during climate events, and impacts are used selectively for stewardship narratives. Evidence informs engagement escalation, portfolio tilts, and long-term allocation rather than short-term buy/sell decisions.

Practice indicators: Measuring institutional capability

Practice indicators assess whether institutions are building the systems needed to deliver results. Categories include portfolio composition, capacity and skills, client engagement, internal process integration, and advocacy and partnerships. The Toolkit highlights balancing leading and lagging indicators, embedding social considerations, and linking indicator signals to concrete management actions such as training, policy enforcement, or partnership development.

Implementation roadmap and next steps

Institution-specific roadmaps outline phased implementation, from identifying in-scope activities and embedding data requirements to tracking outputs, measuring outcomes, and scaling through standardisation. Common challenges include data gaps, attribution complexity, costs, and greenwashing risks. Recommended responses include starting narrowly, using contribution framing, leveraging partnerships, and ensuring verification before external claims. The Toolkit concludes that credible, decision-useful measurement is foundational to scaling adaptation finance responsibly.