Backed by the UN Environment Programme Finance Institute, the framework offers investors metrics on how to assess the impacts of investing in climate adaptation and resilience.
The Adaptation and Resilience Investor Collaborative (ARIC), with the support of the UN Environment Programme Finance Initiative (UNEP FI) has developed a framework for investors to assess the impacts from investing in climate adaptation and resilience.
The framework comes at a time when investors increasingly recognise the opportunities for investments to manage the risks and impacts of climate change.
While there is broad agreement on investment approaches for climate mitigation – investments focused on preventing or reducing the impacts of climate change – the same is not true for climate adaptation finance and how to assess its impact.
In light of this, the new framework can be used to support the assessment of adaptation and resilience at both the investment level and across portfolios.
Paul Smith, senior climate consultant at UNEP FI said: “The need for scaled-up private investment in adaptation and resilience has never been greater. Reported financing flows are way below estimated needs, with an estimated gap of more than €358bn per year to implement domestic adaptation and resilience priorities.
“Despite these opportunities, private investment is still hindered by the lack of clear, practical and investor-relevant metrics that can be used to identify, appraise and prioritise investments that make meaningful contributions towards adaptation and resilience,” Smith added.
Background
Formed at the Finance in Common Summit in 2020, ARIC members include bilateral development finance institutions, multilateral development banks, government aid agencies, and global institutions focusing on adaptation and innovation.
The coalition in 2021 committed to substantially increase investments in climate adaptation and resilience to support vulnerable developing and emerging countries, and in 2022 signed UNEP FI as the secretariat of the initiative.
In addition to the investor-relevant metrics for adaptation and resilience, ARIC has developed other technical work streams including physical climate risks assessment and capital mobilisation approaches.
Climate resilience funds
The social impact of climate change is becoming increasingly apparent. Last month the UN Refugee Agency (UNHCR) launched the UNHCR Climate Resilience Fund, which aims to boost the protection of refugees and displaced communities who are most threatened by climate change.
“The impacts of climate change are only becoming more devastating, increasingly exacerbating conflict, destroying livelihoods and, ultimately, triggering displacement,” said UN high commissioner for refugees, Filippo Grandi.
As part of its work to protect and assist more than 114 million people who have been forced to flee, UNHCR seeks to reduce people’s vulnerability to risks, including the impact of climate change.
For the first time, the fund will exclusively target financing efforts to protect the most threatened displaced communities, equipping them to prepare for, withstand and recover from climate-related shocks.
“Many of the countries that have been the most generous in accepting refugees are also the most impacted by the climate crisis. Funding available to address the impacts of climate change is not reaching those forcibly displaced, nor the communities hosting them,” added Grandi.
