Climate Finance Insights

A Practical Guide to 1.5 C Scenarios for Financial Users I'm incredibly proud of this comprehensive UN Environment Programme report and resource on climate scenarios! It was my final piece of work with United Nations Environment Programme Finance Initiative (UNEP FI) and one that was a major team effort and a multiyear process! We developed it to help financial users to understand the assumptions behind these critical scenarios and how they can be applied in financial decision-making from net-zero target-setting to risk management. It is full of analyses of different scenarios in comparison to each other, explorations of sector decarbonization pathways, and practical applications of scenario data and insights. It covers IPCC, NGFS, and International Energy Agency (IEA) scenarios and brings in data from a variety of sectors in order to show the changes needed to deliver a sustainable future. Have a look through it here: https://lnkd.in/d8G5eSae There really is something in here for everyone. We hope it becomes a valuable desk reference for you and your teams! #climate #netzero #decarbonization #climatescenarios #climatescience #IEA #NGFS #UN #IPCC #climatefinance #climaterisk

🔥 Climate risks are no longer abstract—they’re disrupting businesses, communities, and economies right now. The World Economic Forum’s 2024 report, "The Cost of Inaction: A CEO Guide to Navigating Climate Risk", delivers a sobering message: ignoring climate risks isn’t just irresponsible—it’s economically devastating. 🌡️ Key insights from the report: 💥 Climate-related disasters have caused $3.6 trillion in damages since 2000, exposing critical vulnerabilities in supply chains and infrastructure. 📉 Physical risks could put 5-25% of EBITDA at risk for some sectors by 2050 under a 3°C warming trajectory. 💸 Transition risks, like carbon pricing and changing regulations, could impact 50% of EBITDA in energy-intensive industries by 2030. 🌱 Every $1 invested in climate adaptation yields $2-$19 in avoided costs, while green markets are projected to grow from $5 trillion in 2024 to $14 trillion by 2030. 💡 My reflections: 🔄 Resilience isn’t enough anymore. Too often, we focus on simply "weathering the storm" of climate risk. But true leadership is about rebuilding something better—rethinking markets, redesigning business models, and creating solutions that lead entire industries forward. 🌍 Supply chain fragility is the Achilles’ heel of the global economy. A single extreme weather event can cascade across operations, grinding everything to a halt. Climate-resilient supply chains can’t just be about survival—they must be radically adaptive, decentralized, and built to thrive under disruption. 📊 Climate risk is fundamentally redefining the concept of value. Businesses stuck chasing quarterly earnings are missing the bigger picture. In a world of rising costs and irreversible climate impacts, long-term value will belong to those who embed sustainability, resilience, and equity into their strategies. The time for cautious, incremental steps has passed. How are we using this moment to transform the way we work, innovate, and lead? #ClimateAction #Sustainability #Resilience #Leadership #Innovation

Financial Value of Climate Risks and Opportunities 🌍 Companies are under increasing pressure to reflect climate risks and opportunities in financial decision making. This is essential for embedding sustainability into strategy and unlocking measurable business value. ERM highlights that financial valuation of environmental and social factors enables companies to align investment decisions with long term performance. Value is created through energy efficiency, circular models, responsible sourcing, and workforce inclusion. These actions contribute to resilience, innovation, and cost efficiency. Sustainable products are experiencing significantly higher growth rates than conventional alternatives. Efficiency measures can reduce operating costs by up to 30 percent, while green finance instruments can lower the cost of capital. These gains can be captured directly in financial models and forecasts. At the same time, climate related risks are increasing in scale and frequency. Physical risks already account for over 270 billion dollars in annual damages. Transition risks may result in stranded assets worth hundreds of billions. The broader economic cost of unmitigated climate change could reduce global GDP by up to 18 percent by mid century. ERM presents two complementary approaches. Value creation focuses on capturing upside through efficiency, innovation, and market expansion. Risk mitigation addresses downside exposure by incorporating climate risks into business planning and decision processes. Both require integration of ESG into financial structures. This means applying standard financial tools such as internal rate of return and discounted cash flow to evaluate climate related actions. It also involves including environmental risks in sensitivity testing, pricing models, and capital planning frameworks. Translating these impacts into financial terms enables clearer comparison and stronger governance. Capital markets are moving toward companies that manage climate exposure effectively. Lower financing costs, stronger investor confidence, and increased access to sustainability linked capital are all benefits of a robust ESG integration strategy. Quantifying the financial value of climate related risks and opportunities enables companies to move from qualitative ambition to strategic execution. Those that lead in this area are better prepared to compete, attract capital, and deliver long term results. Source: ERM #sustainability #sustainable #esg #business

India’s Green Financing Opportunity Could Shape a Century   India stands at a defining moment where a growing economic momentum meets an urgent climate imperative. The capital we choose to deploy today, and the priorities that guide this deployment, will influence not just our development trajectory but also the century that India shapes for the world.   At a global scale, the key outcomes from the recently concluded COP30 point towards the immediacy of climate action and the pivotal role of green financing. With strategic policymaking and the emergence of a climate-focused entrepreneurial ecosystem, India has a real opportunity to lead the global cleantech transition and achieve its commitment to reach net-zero by 2070.   Today, Green finance is powering innovation and scaling climate action while enabling entrepreneurship and opening avenues in infrastructure and job creation. At the heart of this transition is India’s rapidly expanding climate-tech or cleantech entrepreneurship ecosystem. Entrepreneurs are building impactful solutions across solar microgrids, battery storage, EV charging, carbon capture and sustainable packaging. According to a news report published by Inc42, Indian climate tech startups attracted over $2.2Bn in new funding over the last 18 months. Despite this momentum, early-stage climate ventures, especially in Tier 2/3 regions, often face barriers in accessing institutional capital. The government is addressing this through policy pivots that strengthen transparency and build confidence in the climate innovation ecosystem.   Subsequently, upper-layer NBFCs, lenders and development finance institutions are collaborating to bridge funding gaps. We are also seeing the rise of innovative financing structures, including blended finance models that combine concessional and commercial capital, thematic green funds to de-risk early-stage investments and ESG-aligned investment frameworks. These tools are helping channel capital to the most impactful and scalable climate innovations. As policy intent aligns with an expanding pool of capital, I truly believe India is well-positioned to become a global cleantech hub. This convergence of finance, innovation and sustainability promises to power India’s transition, strengthens local economies, create green jobs and ultimately shape the green trajectory of the next century not only for the Global South, but for the world.   Now is the time for policymakers, lenders, investors and corporations to take unified action. If India accelerates its green financing architecture with the same ambition as digital and infrastructure transformation, India could set a global benchmark for climate-led growth. The next century will be defined by those who fund the future and India is on the right track to lead the change.

Being “out of scope” of the #CSRD does not mean being out of scope of social and environmental risk. A new study shows how banks are already pricing in future climate risks when giving out loans. If a business has operations in a country that is more exposed to climate change, loans become more expensive, even if the firm hasn’t been hit by a disaster yet. Climate vulnerability raises loan costs by about 0.4% (on average). This is precisely why many "descoped" firms cannot simply step back from climate-related reporting, even if they are exempted under the Omnibus. The expectations of banks, investors, and business partners are not easing, and neither are their risk models. 👉 Markets are adjusting to climate realities regardless of whether regulation is “simplified” or whether we believe there is a "backlash". For banks, it is a risk calculation. That's all. === The study analyzes ~86,000 syndicated bank loans issued to 9,251 firms across 77 countries.

⛈️ 𝐂𝐥𝐢𝐦𝐚𝐭𝐞 𝐑𝐢𝐬𝐤 𝐌𝐞𝐭𝐡𝐨𝐝𝐨𝐥𝐨𝐠𝐲 𝐁𝐚𝐬𝐞𝐝 𝐨𝐧 𝐎𝐩𝐞𝐧-𝐀𝐜𝐜𝐞𝐬𝐬 𝐓𝐨𝐨𝐥𝐬 🗺️ Over the past months, I shared lists of open-access climate and nature risk assessment tools. They sparked quite some interest. Here’s how I thought I might provide additional value: ➡️ A practical Excel methodology for assessing climate risk based on open-access geospatial tools. For every risk category required by the EU Taxonomy, the Excel links to the best assessment tool. 🔥🌡️ This initial release focuses on temperature-related physical risks like heat stress and wildfires. Updates on additional risk categories are forthcoming. 𝐖𝐡𝐚𝐭’𝐬 𝐢𝐧𝐬𝐢𝐝𝐞: 🗺️ Open-access geospatial tools for assessing each temperature-related risk 📊 A conclusive methodology to assess company sites and supply chains 📝 Additional guidance for smooth assessment and reporting in line with EU Taxonomy and CSRD, including descriptions and instructions for each tool 📈 Based on the latest climate models and data by organizations like the IPCC. I hope this will save ESG teams substantial time and money in their search for adequate data and methods. 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭𝐞𝐝 𝐢𝐧 𝐭𝐡𝐞 𝐫𝐞𝐬𝐨𝐮𝐫𝐜𝐞? Comment below, and I’ll send it your way. (Please connect so I can message you directly.)

𝗧𝗵𝗲 𝗕𝗮𝗻𝗸 𝗼𝗳 𝗘𝗻𝗴𝗹𝗮𝗻𝗱 𝗵𝗮𝘀 𝗷𝘂𝘀𝘁 𝘂𝗽𝗽𝗲𝗱 𝘁𝗵𝗲 𝗮𝗻𝘁𝗲 𝗼𝗻 𝗶𝘁𝘀 𝗰𝗹𝗶𝗺𝗮𝘁𝗲 𝗿𝗶𝘀𝗸 𝗲𝘅𝗽𝗲𝗰𝘁𝗮𝘁𝗶𝗼𝗻𝘀 𝗳𝗼𝗿 𝗯𝗮𝗻𝗸𝘀 𝗮𝗻𝗱 𝗶𝗻𝘀𝘂𝗿𝗲𝗿𝘀. 𝗧𝗵𝗶𝘀 𝗶𝘀 𝗮 𝘀𝗶𝗴𝗻𝗶𝗳𝗶𝗰𝗮𝗻𝘁 𝗮𝗻𝗻𝗼𝘂𝗻𝗰𝗲𝗺𝗲𝗻𝘁 𝘁𝗵𝗮𝘁 𝗺𝗮𝘆 𝗵𝗮𝘃𝗲 𝗴𝗼𝗻𝗲 𝘂𝗻𝗻𝗼𝘁𝗶𝗰𝗲𝗱. Banks now own climate risk in the same way they own credit, liquidity and solvency. The BoE’s new Supervisory Statement SS4/25 replaces the 2019 climate guidance and significantly raises the bar for banks and insurers on three fronts: 1. Boards and executives are now explicitly accountable for climate risk, with expectations to embed it into strategy, risk appetite and decision-making. 
 2. Scenario analysis is no longer just a disclosure exercise; it must inform capital planning, stress testing and product design. 3. Data gaps are no longer an excuse; firms are expected to use conservative assumptions where data is weak, which effectively raises the cost of risky exposures. Under PS25/25, the PRA is clear that climate risk must sit inside core risk frameworks, including ICAAP for banks and ORSA for insurers. This moves climate out of the “sustainability” silo and into the core prudential machinery. Regulators are treating banks and insurers as a coupled system. Insurers are told to factor climate into long-term underwriting, mortality and health trends. Banks are told to understand how loss of insurance, valuation shocks and physical damage flow into credit risk and collateral values. This is a massive step forward. 𝗠𝘆 𝗧𝗮𝗸𝗲 If insurers retreat from high-risk areas, banks inherit that risk on their balance sheets. If firms cannot show they are appropriately capitalised for these dynamics, the direction of travel points towards higher capital expectations over time. In short, climate risk is now treated as a transmission mechanism across the financial system, not an isolated ESG topic. This is the end of the “learning phase” on climate risk in UK finance. The PRA has signalled that if you do not quantify climate properly, you will pay for it in capital, governance scrutiny or both. For leaders, the question is no longer whether climate risk is material. The question is whether your board, models and data are credible enough that you would bet your capital requirements on them. If the answer is no, then this is where the real work begins! Source: https://lnkd.in/eN7nKjhr #ClimateRisk #FinancialStability #Banking #Insurance #ClimateGovernance #PrudentialRegulation #Sustainability ___________ 𝘍𝘰𝘭𝘭𝘰𝘸 𝘮𝘦 𝘰𝘯 𝘓𝘪𝘯𝘬𝘦𝘥𝘐𝘯: Scott Kelly

Global climate finance is failing the people who need it most because it’s built for top-down pledges and compliance, not for getting resources into the hands of vulnerable communities. Today, less than 1% of funds reach grassroots adaptation, while 1.3 billion people remain excluded from basic financial services—leaving them unable to absorb climate shocks. In this Forbes article by Felicia Jackson, Tom Mitchell, Executive director of the International Institute for Environment and Development (IIED) and myself at CGAP argue that, to turn commitments into real resilience, we must redesign climate finance to prioritize locally led approaches, radically simplify and speed up access to funds, and align risk perception with market realities. We call for donors, MDBs, and governments to widen local access to climate finance through simplified approvals at major climate funds, channeling more financing through local intermediaries, and setting explicit targets for adaptation and direct community access—so climate money finally reaches the frontlines where it has the greatest impact. Read more at: https://lnkd.in/d8sfiSU4 #climatefinance #inclusivefinance #financialinclusion #locallyledadaptation

Blackrock just took a big write-down on its Global Renewable Power Fund III. Because of two ill-fated investments in Northvolt and SolarZero. Surprisingly, a $4.8 billion fund saw its internal rate of return plummet due to just two portfolio companies faltering. This fund was BlackRock's third flagship GRP fund, part of its bet on the energy transition and a push towards renewable energy and infrastructure. Many of the funds’s assets are early-stage climate infrastructure investments in: EV charging, renewable generation, and power storage and transmission. Are they simply making bad investments or is this a prequel to what to expect? What this tells me about climate tech investing: 1. The significant impact of two companies on a $4.8 billion fund suggests that traditional risk models needs reevaluation. The conventional playbook for diversification doesn't quite work in climate tech. When companies in your portfolio are all betting on similar technological advances or regulatory shifts, they tend to sink or swim together. Traditional risk models might be missing these hidden correlations. 2. The Northvolt situation is a wake-up call - throwing money at climate tech isn't enough. These companies need investors who roll up their sleeves and get involved. We're seeing a shift from passive to active investing, where deep operational expertise is just as crucial as the capital itself. 3. SolarZero, a major player in New Zealand Energy Sector, was far from an early-stage startup when BlackRock acquired it in 2022. Despite its 50-year history , something went wrong. It hints at a broader challenge: global funds rushing into new markets might be overlooking local market dynamics and regional complexities in their eagerness to deploy capital in the renewable space. As this sector matures, we need a new framework for resilient investment strategies that can better weather the failures of individual companies while capitalizing on the overall growth trend in clean energy. #climatetech #VC #investment #newbook #fundclimatetech #blackrock Link for the news in the comments.

𝗪𝗵𝗲𝗿𝗲 𝗮𝗿𝗲 𝘄𝗲 𝟲 𝘄𝗲𝗲𝗸𝘀 𝗶𝗻𝘁𝗼 𝘁𝗵𝗲 𝗨𝗦𝗔𝗜𝗗 𝗴𝗹𝗼𝗯𝗮𝗹 𝗮𝗶𝗱 𝗳𝗿𝗲𝗲𝘇𝗲? Here are a few takeaways from 50+ conversations I’ve had in the last six weeks. The dust is still settling, but the big picture is coming into focus. 🇺🇸 𝗨𝗦𝗔𝗜𝗗 𝗙𝘂𝗻𝗱𝗶𝗻𝗴 𝗜𝘀𝗻’𝘁 𝗖𝗼𝗺𝗶𝗻𝗴 𝗕𝗮𝗰𝗸 𝗔𝗻𝘆𝘁𝗶𝗺𝗲 𝗦𝗼𝗼𝗻 🔹 No one expects a quick return. Some speculate that if a major crisis—like a pandemic—hits, the administration may be forced to restart programs, but only reactively. 🔹 People are divided on whether or not the administration will honor the $2 billion in payments that the Supreme Court upheld. Most agree that the deadline (of today) will not be honored. But a slight majority believe that the payments will be made eventually. Others have no faith. 🔹 For the few programs that have waivers, getting paid is extremely uncertain. Some orgs are moving forward, but risk delayed or withheld funds, making planning difficult. 🔹 Many implementing orgs are trying to pivot—some to private sector partnerships, others to domestic work, and most just trying to survive. Some have already shuttered. 💰 𝗣𝗵𝗶𝗹𝗮𝗻𝘁𝗵𝗿𝗼𝗽𝘆: 𝗡𝗼𝘁 𝗧𝗵𝗲 𝗦𝗮𝘃𝗶𝗼𝗿 𝗪𝗲 𝗛𝗼𝗽𝗲𝗱 𝗙𝗼𝗿 🔹 Only a few large foundations are making moves. MacArthur Foundation increased its payout rate from 5% to 6%, a bold move I hope others follow. Bloomberg Philanthropies pledged to fill climate funding gaps as government support retreats. I was expecting more by now. So were many others I talked with. 🔹 Many smaller and medium foundations are overwhelmed with requests and doubling down on existing grantees with private commitments and assurances. 🔹 Most folks I've talked to don't have a lot faith philanthropy at the moment— things are moving too slow with some reprioritization happening behind closed doors, but not at a volume that will be able to meet shortfalls. 🏢 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗦𝗼𝗰𝗶𝗮𝗹 𝗜𝗺𝗽𝗮𝗰𝘁 🔹 Many tech companies and corporations were already scaling back social impact work before the new administration (with a few exceptions). 🔹 Many are quietly aligning with administration priorities, while others deferring any social impact funding decisions to legal and exec teams. 🔹 No one wants to attract attention right now. Companies are hesitant to make big moves, waiting to see how things shake out. ⚠️ 𝗧𝗵𝗲 𝗢𝘂𝘁𝗹𝗼𝗼𝗸? 𝗨𝗻𝗰𝗲𝗿𝘁𝗮𝗶𝗻, 𝗕𝘂𝘁 𝗡𝗼𝘁 𝗛𝗼𝗽𝗲𝗹𝗲𝘀𝘀 🔹 Many remind me: It won’t stay this bleak forever. 🔹 There’s an enormous amount of resilience—people helping people. Community building, grassroots efforts, support networks and convenings forming. Will do more posts on this, but that is where the energy is rn. 🔹 Some tempered but tangible excitement for rebuilding in new ways and using our collective creativity to grow from the ashes. I'm seeing and hearing a lot of this. What are you seeing in your networks? Let’s keep the conversation going. Sharing is CARING.