The Adaptation Gap: What Physical Climate Risks Mean for Finance

As climate change intensifies, cutting greenhouse-gas emissions remains a priority. However, some climate impacts are already irreversible. With the frequency and severity of extreme weather events increasing, adaptation investments have become an immediate economic and financial policy issue. Yet responsibility for adaptation remains fragmented, and investment often lags behind identified risks.

The session will open with a presentation by Bundesbank, looking at the relevance of physical climate risks forthe German economy and financial sector and sharing insights into climate adaptation measures taken in reaction. New analysis of Germany’s adaptation planning will be presented, examining how the public sector is responding to growing physical risks. The results highlight differences in adaptation planning by municipality and shed a light on possible gaps in protection against extreme weather events, which can leave the economy, financial sector, and people exposed to risk.

Building on these insights, an expert panel will explore:

·          Where are the most important gaps in adaptation planning and financing?

·          How do responsibilities and incentives across levels of government affect adaptation measures?

·          What are the implications of insufficient adaptation for banks, insurers and other financial institutions?

·          Can adaptation investments serve as a risk-management tool for the financial sector?