A climate change adaptation index for financial risk assessment

Abstract

As climate disasters increase in frequency and severity, financial institutions are increasingly factoring how loss and damage may affect their portfolios. We developed a Climate Change Adaptation Index to assess how countries essential to Ortec Finance’s client portfolio are adapting to the impacts of climate change based on their national adaptation plans, current adaptive capacity, and the feasibility of future adaptation plans. After applying the index to several countries and regions, our investigation reveals which geographic areas are likely better adapted to climate change. This project explores variations in country preparedness, highlights gaps in adaptation evaluation, and offers a unique methodology for assessing climate adaptation. Our findings have implications for integrating adaptation with financial climate risk modeling and support the implementation of robust adaptation strategies and programs.