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1、Top 50 Banks In The World Tackling Adaptation-2024White Paper2024Top 50 Banks In The World Tackling AdaptationThis white paper has been produced in a collaboration between ClimateX and Climate ProofTop 50 Banks In The World Tackling AdaptationContentsIntroduction.601.Methodology.802.Adaptation Indic

2、ators.1203.LLM-based Assessment.16 Retrieval Augmented Generation Pipeline for analysing adaptation indicators.1804.Adaptation Maturity Ranking.2005.Analysis.24 1 Bank Analysis.25 2 Indicator Analysis.27 3 Country Analysis.30 4 Indicator Evidence.32Conclusion.42 Appendix 1 .20 Appendix 2 .22About Cl

3、imate X .1643Introduction4Top 50 Banks In The World Tackling AdaptationTop 50 Banks In The World Tackling AdaptationClimate change is transforming businesses and the banks that finance them.As our world heats up,extreme weather events are becoming more frequent and severe,causing billions in economi

4、c losses.Over time,slow onset events caused by climate change,like desertification,biodiversity loss,and sea level rise,threaten to upend the economic prospects of entire countries and regions.In light of these escalating risks,there is growing concern over the ability of the financial system to wit

5、hstand climate shocks and provide the products,services,and tools the wider economy needs to adapt to a hotter world and become more resilient to natural disasters.Investment in adaptation and resilience is essential to ensure businesses and communities can prepare,prevent,respond to,and recover fro

6、m climate-related shocks and stresses.Banks have a key role to play in providing this investment and nurturing markets in adaptation and resilience solutions.The question is:to what extent are banks currently fulfilling this role?5Top 50 Banks In The World Tackling AdaptationTo answer this,we have p

7、roduced a first-of-its-kind ranking of 50 of the worlds largest commercial banks by climate adaptation maturity(development finance institutions and multilateral development banks are out of scope).This provides a high-level overview of the relative performance of lenders against a series of 17 qual

8、itative indicators,covering how banks think about,act on,and track various climate adaptation efforts.By assessing these indicators,we can discern how banks are integrating climate adaptation considerations into their frameworks and identify trends,regional disparities,and best practices.The analysi

9、s reveals that most banks exhibit a low level of engagement with climate adaptation.No bank met more than 12 of the 17 indicators,and all but seven banks met less than half of the indicators.The data also shows a high degree of regional variability.UK and European banks,perhaps driven by more string

10、ent climate policies and guidance,met a higher number of indicators on average than banks in the US,Canada,and Australia.Ultimately,the analysis underscores the vast amount of work that banks of all stripes have to undertake if they are to effectively“climate-proof”their own operations and the econo

11、mies they serve.6Contact us at researchclimate- if youd like to improve the research or understand more about our climate adaptation solutionsJoin the discussionTop 50 Banks In The World Tackling Adaptation7 7Methodology8Top 50 Banks In The World Tackling AdaptationTop 50 Banks In The World Tackling

12、 AdaptationClimate adaptation is a still-evolving theme among banks.While there is an abundance of guidance on how banks can align their lending and investing activities to climate mitigation goals,the same is not true when it comes to adaptation.This makes devising a methodology for assessing the a

13、daptation maturity of banks challenging.However,there are certain resources that can be drawn upon.The Principles for Responsible Banking,a UN-backed climate finance alliance,has an Adaptation Target Setting Working Group that published guidance on adaptation target setting in 2023.In 2024,the Unite

14、d Nations Environment Programme Finance Initiative(UNEP FI)produced a framework for assessing the positive adaptation and resilience impacts of investments.Furthermore,the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD)include items on reporting climate physical risk

15、s and opportunities,which may include adaptation activities.Climate Proof,a leading publication on climate adaptation and resilience,developed an assessment methodology for grading the adaptation maturity of banks grounded in the principles and recommendations enumerated by these and other sources.9

16、Top 50 Banks In The World Tackling AdaptationThe methodology consists of 17 qualitative indicators,grouped into three themes:The indicators are described in the next chapter.Fifty of the worlds largest banks(ex-China)most recent annual reports were analyzed for alignment with the 17 indicators using

17、 a Large Language Model(LLM)approach.The more indicators a bank met,the greater its adaptation maturity was judged to be.This indicator-led approach is intended to produce a high-level overview of each banks adaptation maturity and allow them to be ranked relative to one another.THINKStrategic align

18、ment and assessment of physical climate risksDOImplementation of adaptation measures and strategiesTRACKMonitoring,reporting,and transparency of adaptation actions10Top 50 Banks In The World Tackling AdaptationHowever,readers should be aware of the following shortcomings.First,the assessment is base

19、d on banks public disclosures,and one disclosure in particular their annual reports.Therefore,the results are skewed toward those institutions that disclose their adaptation activities in said documents.Certain banks may be developing adaptation plans and pursuing relevant activities without disclos

20、ing them.Second,the indicators are qualitative,and therefore subjective by nature.The conclusions drawn by our LLM-based approach on a banks alignment with the indicators would likely differ from those drawn by another LLM-or human-based approach.There is no comprehensive quantitative data of commer

21、cial banks adaptation financing,and therefore no quantitative factors were incorporated into our analysis.Third,though the indicators are broad in scope and draw on authoritative sources,they may not cover all elements that contribute to a banks adaptation maturity.For example,there is no indicator

22、related to“Just Adaptation”,the concept that adaptation actions should address pre-existing inequalities in climate vulnerability and economic capabilities.Future iterations of the methodology will seek to close these gaps and ensure comprehensive coverage of all aspects of adaptation maturity.It is

23、 also important to reiterate that this analysis considers climate adaptation actions only.It does not take into account banks climate transition efforts,risks,or opportunities.A bank that exhibits a high level of adaptation maturity may not necessarily also be taking aggressive action on mitigation(

24、for example,by reducing its exposure to fossil fuels),and vice versa.11Adaptation Indicators12Top 50 Banks In The World Tackling AdaptationTop 50 Banks In The World Tackling AdaptationIndicatorEvidence RequiredTHINKPhysical Risk ScenariosEvidence that the bank is using physical climate scenarios as

25、part of their risk management and strategy.Physical Risk Exposure Analysis/AssessmentEvidence that physical climate risk exposure is calculated and monitored across lending portfolios to assess potential accumulation of risks.Alignment with National/International Adaptation GoalsEvidence that the ba

26、nks climate strategy considers the adaptation-related components of the Paris Agreement,Global Goal on Adaptation,Sharm El Sheikh adaptation agenda,and/or National Adaptation Plans for country-level priorities.High-Level Adaptation AssessmentEvidence that a macro-level analysis of climate impacts an

27、d adaptation needs has been carried out for the economies where the bank operates in order to estimate loss and damage costs,as well adaptation needs.Adaptation PlanEvidence that the bank has its own adaptation plan,either as a standalone or incorporated into a broader climate or sustainability plan

28、.Adaptation-Nature NexusEvidence that the bank recognizes the importance of nature protection and restoration to adaptation planning and implementation.For example,the bank invests in or otherwise supports nature-based solutions.13Top 50 Banks In The World Tackling AdaptationIndicatorEvidence Requir

29、edDOPhysical Risk ManagementEvidence that physical risk exposure is managed.Evidence may include:physical risk considered in loan origination,loan originators having the skills necessary to assess physical risks,loan terms differentiated to account for physical risk exposure,loan terms adjusted afte

30、r natural catastrophes,efforts made to ensure loan collateral is climate resilient.Lending for Adaptation&ResilienceEvidence that the bank provides products/services at the individual borrower/community level to support adaptation and resilience measures.For example,the bank may say it invests in an

31、d makes use of early warning systems that inform clients ahead of time of climate physical risks.Or they may provide short-term loans to help borrowers“bounce back”after a disaster has struck.Natural Catastrophe SupportEvidence that the bank supports communities or local/national non-profit organiza

32、tions that are proficient in providing disaster response measures.Physical Risk Data GatheringEvidence that the bank collects and uses on a continual basis:hazard/natural catastrophe data,asset/firm/sector-level data,climate risk financial impact data.Client EngagementEvidence that the bank engages

33、clients on climate physical risk,for example by requiring that they produce adaptation plans of their own or otherwise communicate their resilience actions,by educating clients on climate risk,and/or providing financial incentives to build up resilience.Partnerships and AdvocacyEvidence that the ban

34、k is working with governments,other financial institutions,businesses and civil society to address climate-related impacts and support policies with adaptation/resilience benefits.14Top 50 Banks In The World Tackling AdaptationIndicatorEvidence RequiredTRACKMonitoring and EvaluationEvidence of a fra

35、mework/process for monitoring and evaluating the success/failure of adaptation measures.Adaptation Impact Metrics In UseEvidence that the bank collects and reports metrics on the adaptation/resilience impact of adaptation-related investments.Physical Risk Metrics In UseEvidence that the bank collect

36、s and reports metrics on the impact of climate physical risks,in line with TCFD recommendations and/or ISSB standards.Adaptation Impact Targets In UseEvidence that the bank has set targets for the adaptation/resilience impact of adaptation-related investments.Physical Risk Targets In UseEvidence tha

37、t the bank has set targets for limiting/reducing the impact of climate physical risks,in line with TCFD recommendations and/or ISSB standards.15LLM-based Assessment16Top 50 Banks In The World Tackling AdaptationTop 50 Banks In The World Tackling AdaptationThe LLM-based approach used for this analysi

38、s was adapted from the research paper“Combining AI and Domain Expertise to Assess Corporate Climate Transition Disclosures”by Colesanti Senni et.al.,2024 and the associated code repository by Tobias Schimanski.LLMs have demonstrated value in comprehension,reasoning,and text generation in the climate

39、 domain.In the field of climate adaptation,an LLM-based approach has been used by the Global Adaptation&Resilience Investment Working Group to identify companies that contribute to adaptation solutions.However,LLMs are known to“hallucinate”,meaning they produce text that is not factual.In addition,t

40、he embedded knowledge base on which LLMs are trained are generally opaque and timebound.These make relying on LLMs for in-depth analysis in niche domains challenging.To remedy these shortcomings,our LLM-based approach uses a technique called Retrieval Augmented Generation(RAG).This is used to ground

41、 the LLMs response to specific questions in a bespoke knowledge base which it must rely on when formulating its answers.RAG approaches therefore reduce dependence on the embedded knowledge base of the LLM itself and can reduce hallucination.17Top 50 Banks In The World Tackling AdaptationRetrieval Au

42、gmented Generation Pipeline for analysing adaptation indicatorse.g.“Does the company use physical climate scenarios as part of their risk management and strategy?e.g.“NO,the company does not use physical climate scenariosASSESSMENT INDICATORSDISCLOSED OR NOT DISCLOSEDRetrieval QueryRetrieval TextsSo

43、urces+Question+DefinitionYes/No ResponseQuestionCompany (Annual)ReportLarge Language Model18Top 50 Banks In The World Tackling AdaptationIn our LLM-based approach,each indicator is framed as a text question.These are used to find text sections in a banks annual report that are semantically similar,m

44、eaning relevant for answering the given question.These retrieved texts are then embedded in a prompt provided to the LLM along with guidelines on what to focus on when answering the question.The approach then produces a“Yes”or“No”answer on whether the indicator is met or not in the banks report.This

45、 is accompanied by an explanation of the decisions and the source references retrieved,which allows for manual review.The questions for each indicator can be found in Appendix 1.19Adaptation Maturity Ranking20Top 50 Banks In The World Tackling AdaptationTop 50 Banks In The World Tackling AdaptationT

46、he following table ranks the 50 largest banks in the world by assets(ex-China)by the number of adaptation indicators met.This shows that most banks have only met a handful of indicators,implying a low overall level of adaptation maturity across the sector.Of the 50 banks,43 achieved less than half o

47、f the 17 indicators.Moreover,while most banks have met indicators on analysing their physical risk exposures and collecting data,not one was found to have set adaptation impact metrics and targets.Few banks evidence that they provide lending for adaptation and resilience or support for businesses an

48、d communities hit by natural catastrophes.A comprehensive breakdown by individual indicator can be found in Appendix 2.21Top 50 Banks In The World Tackling AdaptationBankCountryThink IndicatorsDo IndicatorsTrack IndicatorsTotal IndicatorsRankStandard Chartered PLCUK642121Banco Santander SASpain54211

49、2Banco Bilbao Vizcaya Argentaria SASpain442103UniCredit SpAItaly44194Sberbank of Russia Russia34294Sumitomo Mitsui Financial Group Inc.Japan44194La Banque Postale SAFrance44194RabobankNetherlands44085HSBC Holdings PLCUK35085Mizuho Financial Group Inc.Japan43185Groupe BPCEFrance35085Mitsubishi UFJ Fi

50、nancial Group Inc.Japan34185Lloyds Banking Group PLCUK53085Nordea Bank AbpFinland33176ING Groep NVNetherlands43076Commerzbank AGGermany33176Credit Mutuel GroupFrance33176Credit Agricole GroupFrance32276UBS Group AGSwitzerland33176CaixaBank SASpain32276Norinchukin BankJapan43076Bank of America Corp.U

51、S24176Royal Bank of CanadaCanada33067Westpac Banking Corp.Australia42067State Bank of IndiaIndia42067Itau Unibanco Holding SABrazil33067Intesa Sanpaolo SpAItaly2406722Top 50 Banks In The World Tackling AdaptationBankCountryThink IndicatorsDo IndicatorsTrack IndicatorsTotal IndicatorsRankSociete Gene

52、rale SAFrance32167Commonwealth Bank of AustraliaAustralia24067Toronto-Dominion BankCanada24067Barclays PLCUK32167Bank of Nova ScotiaCanada24067NatWest Group PLCUK24067ANZ Group Holdings Ltd.Australia14058BNP Paribas SAFrance32058Deutsche Bank AGGermany32058DZ Bank AGGermany23058Canadian Imperial Ban

53、k of CommerceCanada32058Bank of MontrealCanada23058PNC Financial Services Group IncUS22049DBS Group Holdings Ltd.Singapore22049Citigroup Inc.US13049National Australia Bank Ltd.Australia120310JPMorgan Chase&Co.US120310Wells Fargo&Co.US110211Japan Post BankJapan110211Morgan StanleyUS100112Goldman Sach

54、s Group Inc.US000013Capital One Financial Corp.US000013U.S.BancorpUS00001323Analysis24Top 50 Banks In The World Tackling AdaptationTop 50 Banks In The World Tackling Adaptation1 Bank AnalysisThe analysis reveals a significant disparity in banks adaptation maturity.Standard Chartered tops the ranking

55、 with 12 indicators met,demonstrating a strong commitment to multiple aspects of climate adaptation and resilience.While headquartered in the UK,Standard Chartered has three-quarters of its loan book exposed to borrowers in Asia,many of which are exposed to escalating chronic and acute physical haza

56、rds.The bank is actively championing adaptation and physical risk management as a priority for itself and its clients.In April 2024,it even published a Guide for Adaptation and Resilience Finance.Standard Chartered is closely followed by Banco Santander SA with 11 indicators met and Banco Bilbao Viz

57、caya Argentaria SA(BBVA)with 10.These banks have significant exposures to regions currently affected by,and likely to become more vulnerable to,worsening climate extremes.Their disclosures reflect robust internal policies and strategic initiatives to support adaptation and resilience.However,43 of t

58、he 50 banks met less than half of the 17 indicators.The median number of indicators met across the sample was six.In addition,banks generally met more Think and Do indicators than Track indicators.This may reflect how adaptation-related metrics and targets are still in development,and the lack of co

59、nsensus on what aspects of adaptation should or indeed can be measured.For example,Japans SMFG,Italys Unicredit,and Frances La Banque Postale all met nine out of 17 indicators in total,but only one of the Track indicators apiece.In fact,32 of the banks did not meet any Track indicators at all.25Top

60、50 Banks In The World Tackling AdaptationA large number of banks have moderate adaptation maturity,with 5 to 7 indicators met.This group includes heavyweights like ING Groep NV from the Netherlands,UBS Group from Switzerland,and Barclays from the UK.These banks evidence some level of engagement with

61、 climate physical risks and adaptation,but their disclosures lack actions to meet the escalating threat posed by climate shocks or maximize adaptation and resilience opportunities.At the other end of the spectrum,some banks exhibit a low level of adaptation maturity.This is notably the case for US b

62、anks.Citigroup Inc.,JPMorgan Chase&Co.,Wells Fargo&Co.,and Morgan Stanley met four,three,two,and one indicators,respectively.Three US banks met no indicators at all Goldman Sachs Group Inc.,Capital One Financial Corp.,and U.S.Bancorp.This suggests these banks are taking little to no action on adapta

63、tion or at the very least are not disclosing such actions in their annual reports.It is also possible that these banks describe adaptation efforts in their disclosures differently from peer banks in other countries,and were therefore overlooked by the LLM-based approach.Overall,the bank-level analys

64、is reflects an industry that is in the early stages of understanding and acting on adaptation.No bank met more than three-quarters of the 17 indicators,and the vast majority met less than half.Furthermore,a large number including some of the biggest lenders in the world met vanishingly few indicator

65、s.This suggests that most banks have a long process of education,capacity building,and planning ahead of them.26Top 50 Banks In The World Tackling AdaptationOverall,while some banks are leading the charge with comprehensive climate strategies,others are just beginning their journey or lagging signif

66、icantly.This varied landscape underscores the ongoing need for increased focus and action on climate adaptation and resilience across the global banking sector.2 Indicator AnalysisAnalysing the distribution of indicators themselves shines a light on those aspects of adaptation and resilience that ba

67、nks are focusing on,and those they are neglecting.The indicators“Physical Risk Exposure Analysis/Assessment”and“Physical Risk Scenarios”were each met by 43 banks,the highest among all indicators.This suggests that many banks prioritize understanding and assessing their physical risk exposures and us

68、e scenarios to anticipate and prepare for potential climate impacts.The importance of such efforts has been impressed upon banks for several years now,through frameworks like the TCFD and regulatory initiatives including the European Central Banks Guide on climate-related and environmental risks.Clo

69、se behind are the indicators“Physical Risk Data Gathering”and“Physical Risk Management”,each met by 42 banks.These indicators demonstrate that most banks are not only assessing risks but are also actively gathering data and implementing management strategies to mitigate climate hazards.Again,regulat

70、ory initiatives,particularly those around climate-related financial disclosure,likely explain why these indicators have a high positive response.27Top 50 Banks In The World Tackling AdaptationFurther down the order,the indicator“Adaptation-Nature Nexus”was met by 29 banks,highlighting a moderate lev

71、el of engagement in recognizing the interconnectedness of climate adaptation and nature-related issues,such as biodiversity and ecosystem protection.Some institutions have incorporated nature-based solutions in their climate agendas,with the understanding that these can produce climate mitigation an

72、d adaptation benefits concurrently.An increasing number of banks are likely to explore the adaptation-nature nexus through the Taskforce on Nature-related Financial Disclosures and climate-nature scenarios produced by the Network for Greening the Financial System.Indicators for“Client Engagement”,“L

73、ending for Adaptation and Resilience”,and“Natural Catastrophe Support”also have a moderate response rate with 22,19,and 18 banks meeting these,respectively.This suggests that some banks are extending their climate adaptation efforts beyond their own internal operations to include their interactions

74、with clients and communities.Engaging clients and offering financial products that support adaptation efforts are crucial for building up the resilience of banks own portfolios and positioning them to maximize the opportunities presented by the emerging adaptation economy.A number of indicators were

75、 met by very few banks.For example,“Alignment with National/International Adaptation Goals”and“Physical Risk Targets In Use”had just 2 and 1 positive responses,respectively.This low engagement suggests that banks may not be taking steps to understand broader adaptation goals or align their own strat

76、egies with them.These areas represent significant opportunities for improvement,as aligning with national and international goals can enhance the effectiveness and coherence of banks own climate adaptation efforts.28Top 50 Banks In The World Tackling AdaptationCertain indicators,including“Partnershi

77、ps and Advocacy,”“Adaptation Impact Metrics In Use,”and“Adaptation Impact Targets In Use,”were met by no banks at all.This reflects how adaptation target-setting is still in its infancy,and the fact that policymakers and regulators have yet to settle on a series of metrics for adaptation and resilie

78、nce that could be adopted by the financial industry.As relates to“Partnerships and Advocacy”,while most banks do disclose that they work with environmental organizations,industry associations,and socially responsible investment organizations,such groups cover broad issue areas and do not focus expli

79、citly on adaptation or resilience,which is likely one reason why the LLM-based approach did not identify any banks that met this indicator.Overall,the distribution of positive responses across indicators reveals a strong emphasis on understanding and managing physical risks by banks and much less on

80、 delivering adaptation and resilience products and services and integrating adaptation into business-as-usual.29Top 50 Banks In The World Tackling Adaptation3 Country AnalysisThe banks assessed hail from all over the globe.Of the 50,18 are headquartered in Europe,nine in the US,five in the UK,five i

81、n Canada,five in Japan,four in Australia,and one apiece in Brazil,India,Russia,and Singapore.In this analysis,we examine the distribution of indicators across jurisdictions that have more than one bank in the sample to highlight regional differences in adaptation maturity.The UK has banks with the h

82、ighest adaptation maturity,with an average of eight indicators met per bank.UK banks such as Standard Chartered,Barclays,and Lloyds Banking Group exhibit substantial engagement.This may be driven by the UKs regulatory environment,which has emphasized climate-related disclosures and risk management i

83、n recent years.It likely also reflects Standard Chartereds concerted effort to embed adaptation and resilience into its business strategy.Banks in Europe demonstrate high adaptation maturity with an average of 7.3 indicators met per bank.This reflects the significant engagement of European banks wit

84、h climate issues,which has been encouraged by regulatory and policy efforts at the European Union level.In Japan,an average of 6.8 indicators met with a positive response.The country is no stranger to climate-driven physical risks,such as typhoons,which may in part explain the level of climate matur

85、ity evidenced.Large numbers of Japanese companies are also adherents of the TCFD,which may also be a contributing factor.30Top 50 Banks In The World Tackling AdaptationCanada has banks with fairly low adaptation maturity.The average number of indicators met by the countrys banks is 5.6.The top perfo

86、rmer was Royal Bank of Canada,which met six of the indicators.Canada has introduced rules requiring banks to address climate risks and conduct scenario analysis,though these have only recently come into effect.It is possible that their adaptation maturity will increase as a result of these regulatio

87、ns.Banks in Australia met an average of 5.25 indicators each.Westpac and Commonwealth Bank of Australia met six indicators apiece,ANZ Group five,and National Australia Bank three.Australias financial regulator conducted an exploratory climate scenario analysis of the countrys major banks in 2022 whi

88、ch may have compelled some institutions to embrace adaptation and resilience.However,it does not appear from their most recent disclosures that this has translated into a meaningful effort by all banks to climate-proof their operations and portfolios.The US has banks with the lowest adaptation matur

89、ity.The average number of indicators met is just 2.33 per bank.Three US institutions did not meet a single indicator,meaning their reports show no evidence that they are engaging with adaptation at all.This may reflect the lower engagement with climate issues exhibited by US banks vis-a-vis those in

90、 Europe and elsewhere,and an absence of meaningful climate-related financial regulation.However,another reason may be the composition of US bank disclosures.Many European banks produce integrated reports that include a wealth of climate and non-financial data.This is less common in the US.31Top 50 B

91、anks In The World Tackling Adaptation4 Indicator EvidenceThis section provides examples of how banks met the adaptation indicators,using evidence from their annual reports.INDICATOR 1Physical Risk ScenariosBANK Standard CharteredStandard Chartered uses physical climate risk scenarios as part of thei

92、r risk management and strategy.They employ physical risk assessment tools for location-based hazard and risk scores under various RCP scenarios(2.6,4.5,and 8.5)for acute and chronic risks.They also incorporate physical risk scenarios in their stress-testing framework for traded risk exposures.Additi

93、onally,they use the IPCCs RCP scena-rios for assessing exposure concentration to sea-level rise risk in their Consumer,Private,and Business Banking(CPBB)portfolios.32Top 50 Banks In The World Tackling AdaptationINDICATOR 2Physical Risk Exposure Analysis/AssessmentBANK Banco SantanderSantander calcul

94、ates and monitors their physical climate risk exposure across lending portfolios.The report mentions the use of the Klima tool,which includes a physical risk assessment module for collateral and customer portfolios,broken down by economic activity.In addition,the company runs quarterly materiality a

95、ssessments to identify loan portfolios with the highest physical and transition risk.These assessments are integrated into their credit risk metrics and scenario analysis techniques.INDICATOR 3Alignment with National/International Adaptation GoalsBANK RabobankRabobanks report mentions a collaboratio

96、n between the Dutch financial sector,the Dutch government,the Delta commissioner,and a network of organizations called Climate Proof Together to launch the report Accelerating climate adaptation an alliance between the financial sector and government.33Top 50 Banks In The World Tackling AdaptationIN

97、DICATOR 4High-Level Adaptation AssessmentBANK Lloyds Banking GroupThe bank has developed“a baseline view of physical risk for the UK”and conducts forward-looking climate stress testing to inform this.Its report details the use of scenario analysis to understand the potential impacts of climate risks

98、 on the Group.However,the report does not provide a breakdown of the adaptation actions that are needed at the UK level to harden the country against current and future climate shocks.INDICATOR 5Adaptation PlanBANK Royal Bank of CanadaThe bank has measures in place to analyze and manage physical cli

99、mate risks.It classifies environmentally sensitive locations based on various risk factors such as site location,power supply,exposure to flooding,geological stability,and other hazards.It also take steps to mitigate and adapt to climate change through building design and purchasing decisions.Additi

100、onally,the bank is expanding its climate data inventory and enhancing climate data governance processes to improve climate risk analytical capabilities.34Top 50 Banks In The World Tackling AdaptationINDICATOR 6Adaptation-Nature NexusBANK BNP ParibasBNP Paribas demonstrates an understanding of the im

101、portance of nature protection and restoration to climate adaptation.The bank has set up financing and investment policies since 2012 to limit impacts on biodiversity in sensitive sectors such as agriculture,palm oil,paper pulp,mining,oil,and gas.Additionally,the BNP Paribas Foundation supports resea

102、rch on climate change and biodiversity,including projects on underwater animal forests and coastal ecosystems.The company also participates in bond issues aimed at preserving natural environments,such as maintaining primary forests and improving water quality.These actions indicate a commitment to n

103、ature-based solutions and ecosystem preservation.INDICATOR 7Physical Risk ManagementBANK BarclaysBarclays has integrated climate risk into its Enterprise Risk Manage-ment Framework and developed a Climate Risk Framework to manage financial and operational risks stemming from climate change.Barclays

104、assesses the impact of physical risks on mortgage collateral valua-tion,specifically considering flooding and subsidence.The bank also includes climate factors in Structured Scenario Assessments,which capture extreme but plausible operational tail risks,such as building destruction scenarios.Additio

105、nally,Barclays conducts quarterly horizon scanning exercises to identify and assess climate risks,which are then integrated into the Group Risk Register.35Top 50 Banks In The World Tackling AdaptationINDICATOR 8Lending for Adaptation&ResilienceBANK BBVABBVA provides products and services to support

106、adaptation and resi-lience measures by its clients and their communities.The company offers loan products under the Microfinance for Ecosystem-based Adaptation(MEbA)program to help small farmers adapt to climate change and collaborates with water.org to facilitate access to clean water and sanitatio

107、n systems.Additionally,BBVA provides microinsu-rance to small entrepreneurs to protect against natural catastrophes and adverse weather risks.BBVA also supports SMEs in incorporating ESG practices and offers sustainable products through its digital chan-nels and branch networks.INDICATOR 9Natural Ca

108、tastrophe SupportBANK State Bank of IndiaSBI supports communities and local/national non-profit organizations proficient in providing disaster response measures.The report mentions donations to the Disaster Management Fund of the Government of Sikkim,support to the Indian Coast Guard Visakhapatnam,a

109、nd relief efforts for natural calamities in various states such as Rajasthan,Tamil Nadu,and Kerala.Additionally,the Himachal Flood Relief initiative provided essential relief materials to people affected by floods and landslides in Himachal Pradesh.36Top 50 Banks In The World Tackling AdaptationINDI

110、CATOR 10Physical Risk Data GatheringBANK Credit AgricoleCredit Agricole collects and makes use of climate hazard and natural catastrophe data.This is evident from their detailed inventory of physi-cal risks,including various climate,meteorological,geological,biolo-gical,and pollution factors.The ban

111、k also assesses physical climate risks at a macro level using a physical risk index,which combines sector sensitivity indices and geographical sensitivity variables.INDICATOR 11Client EngagementBANK Mitsubishi UFJ Financial GroupMUFG engages clients on their physical climate risks.The bank provi-des

112、 strategic assistance through TCFD disclosure-related consulting services and engages with approximately 1,500 corporate clients to enhance climate change-related business.MUFG also conducts envi-ronmental and social risk assessments based on the Equator Principles,which include evaluating the statu

113、s of project developers measures to identify and manage physical risks.37Top 50 Banks In The World Tackling AdaptationINDICATOR 12Partnerships and AdvocacyBANK N/ANo bank was found to have met this indicator.However,a large number of banks did disclose their participation in,or engagement with,vario

114、us industry-led climate initiatives,including the Net Zero Banking Alliance and UN Environment Programme Finance Initiative(UNEP FI).Standard Chartered is likely the bank closest to producing a positive response to this indicator,given its disclosed involvement with the UNEP FI Adaptation Working Gr

115、oup.However,the question posed by this indicator is:“Does the company work with governments,other financial institutions,businesses and civil society to address climate-related impacts and support policies with adaptation/resilience benefit?”The UNEP FI Adaptation Working Group is arguably more focu

116、sed on banks and the financial industry,rather than policy advocacy.38Top 50 Banks In The World Tackling AdaptationINDICATOR 13Monitoring and EvaluationBANK UnicreditThe bank has a framework for monitoring and evaluating the success or failure of their adaptation measures.Specifically,the Third-Part

117、y Assess-ment process has been enhanced to consider business continuity plans for managing potential adverse climate events.Additionally,the company integrates ESG risks into its risk management framework,including the assessment,monitoring,and control of these risks.This indicates a struc-tured app

118、roach to evaluating climate adaptation and resilience.INDICATOR 14Adaptation Impact Metrics In UseBANK N/ANo bank was found to have met this indicator.This may reflect the absence of agreed-on metrics for determining adaptation impact.The publication of an adaptation and resilience impact measuremen

119、t framework by the United Nations Environment Programme Finance Initiative in April 2024 may support financial institutions when it comes to producing such metrics in future reports.39Top 50 Banks In The World Tackling AdaptationINDICATOR 15Physical Risk Metrics In UseBANK Bank of AmericaBank of Ame

120、rica reports metrics on the impact of climate physical risks to its business.The report mentions the number and value of mortgage loans in 100-year flood zones,as well as the total expected loss and loss given default attributable to mortgage loan default and delinquency due to weather-related natur

121、al catastrophes,by geographic region.Additionally,the company references its Task Force on Climate-related Financial Disclosures(TCFD)report for additional data and metrics.INDICATOR 16Adaptation Impact Targets In UseBANK N/ANo bank was found to have met this indicator.As with Indicator 14,this may

122、reflect the absence of agreed-on metrics and targets for deter-mining adaptation impact.It may also be the case that banks are using such metrics and internally,but are not disclosing them.40Top 50 Banks In The World Tackling AdaptationINDICATOR 17Physical Risk Targets In UseBANK SberbankSberbank al

123、igns its approach with the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD)and other regulatory guidelines.Specifically,the bank has implemented models to assess credit and insurance risks related to climate.Additionally,Sberbank conducts climate stress testing of its

124、 loan portfolio to quantify financial stability under various climate scenarios.41Conclusion42Top 50 Banks In The World Tackling AdaptationTop 50 Banks In The World Tackling AdaptationThis first-of-its-kind analysis of major banks climate adaptation maturity reveals an industry that is in the early

125、stages of its climate-proofing journey.While a handful of banks have clearly embraced adaptation as a business imperative,many have yet to engage seriously with this theme.This mirrors the status of the private sector writ large.For years,climate mitigation has been the priority of financial institu

126、tions and corporations.It is only fairly recently that concerted efforts have been made to make adaptation a business priority.However,there is evidence to suggest that banks could quickly scale up their adaptation efforts.Tellingly,many banks report that they identify,measure,and manage physical cl

127、imate risks to their own operations and their portfolios.This is in part a consequence of climate-related financial disclosure rules and standards,which oblige companies to describe their physical risks to external stakeholders.Climate risk management guidance issued by financial regulators likely p

128、layed a role,too.43Top 50 Banks In The World Tackling AdaptationHowever,treating physical risk analysis and adaptation solely as a compliance exercise would be short-sighted.Banks should invest in,and make use of,climate risk data and analytics to climate-proof their portfolios.In this way,they can

129、avoid financial losses and unearth potentially lucrative opportunities in the emerging adaptation economy.The emergence of bank-specific adaptation frameworks and guidance could accelerate this process.Therefore it may not be too long before many more of the worlds top banks have far more robust ada

130、ptation strategies.44Top 50 Banks In The World Tackling AdaptationThis white paper has been produced in a collaboration between ClimateX and Climate Proof by Louie Woodall,Kamil Kluza and Adil Assim.45Top 50 Banks In The World Tackling AdaptationAppendixAPPENDIX 1This table lists the specific questi

131、ons asked of each banks annual report through our LLM methodology.46Top 50 Banks In The World Tackling AdaptationINDICATORLLM QUESTIONTHINKPhysical Risk ScenariosDoes the company use physical climate scenarios as part of their risk management and strategy?Physical Risk Exposure Analysis/AssessmentDo

132、es the company calculate and monitor their physical climate risk exposure across lending portfolios?Alignment with National/International Adaptation GoalsDoes the companys climate strategy consider the adaptation-related components of the Paris Agreement,Global Goal on Adaptation,Sharm El Sheikh ada

133、ptation agenda,and/or National Adaptation Plans for country-level priorities?High-Level Adaptation AssessmentDoes the company conduct analysis of climate impacts and adaptation needs for the economies in which it operates?Adaptation PlanDoes the company have its own adaptation plan?Adaptation-Nature

134、 NexusDoes the company evidence an understanding of the importance of nature protection and restoration to climate adaptation?DOPhysical Risk ManagementDoes the company manage its physical climate risk exposure?Lending for Adaptation&ResilienceDoes the company provide products/services to support ad

135、aptation and resilience measures by its clients and their communities?Natural Catastrophe SupportDoes the company support communities or local/national non-profit organizations that are proficient in providing disaster response measures?Physical Risk Data GatheringDoes the company collect and use cl

136、imate hazard and/or natural catastrophe data?Client EngagementDoes the company engage clients on their climate physical risks?Partnerships and AdvocacyDoes the company work with governments,other financial institutions,businesses and civil society to address climate-related impacts and support polic

137、ies with adaptation/resilience benefit?TRACKMonitoring and EvaluationDoes the company have a framework or process for monitoring and evaluating the success or failure of their adaptation measures?Adaptation Impact Metrics In UseDoes the company collect and report metrics on the adaptation and resili

138、ence impact of adaptation-related investments?Physical Risk Metric In UseDoes the company report metrics on the impact of climate physical risks to its business?Adaptation Impact Targets In UseDoes the company have targets for the adaptation/resilience impact of its adaptation-related investments?Ph

139、ysical Risk Targets In UseDoes the company set targets for limiting/reducing the impact of climate physical risks?47Top 50 Banks In The World Tackling AdaptationAPPENDIX 2This table shows how each bank scored on each Adaptation Indicator.48Top 50 Banks In The World Tackling AdaptationTHINKDOTRACKBAN

140、KPHYSICAL RISK SCENARIOSPHYSICAL RISK EXPOSURE ANALYSIS/ASSESSMENTALIGNMENT WITH NATIONAL/INTERNATIONAL ADAPTATION GOALSHIGH-LEVEL ADAPTATION ASSESSMENTADAPTATION PLANADAPTATION-NATURE NEXUSPHYSICAL RISK MANAGEMENTLENDING FOR ADAPTATION&RESILIENCENATURAL CATASTROPHE SUPPORTPHYSICAL RISK DATA GATHERI

141、NGCLIENT ENGAGEMENTPARTNERSHIPS AND ADVOCACYMONITORING AND EVALUATIONADAPTATION IMPACT METRICS IN USEPHYSICAL RISK METRICS IN USEADAPTATION IMPACT TARGETS IN USEPHYSICAL RISK TARGETS IN USEStandard Chartered PLC(STAN-LSE)1211111111011010100Banco Santander SA(SAN-BME)11011111011010100Banco Bilbao Viz

142、caya Argentaria SA(BBVA-BME)11010111110010100UniCredit SpA(UCG-BIT)1011001110111010000Sberbank of Russia(SBER-MISX)11010011011000101Sumitomo Mitsui Financial Group Inc.(8316-TSE)11010111011000100La Banque Postale SA11010111110000100Rabobank11100111011000000HSBC Holdings PLC(HSBA-LSE)2110001111110000

143、00Mizuho Financial Group Inc.(8411-TSE)11010110011000100Groupe BPCE11000111111000000Mitsubishi UFJ Financial Group Inc.(8306-TSE)11000111011000100Lloyds Banking Group PLC(LLOY-LSE)11011111010000000Nordea Bank Abp(NDA SE-OM)1411000110011000100ING Groep NV(INGA-ENXTAM)11001110110000000Commerzbank AG(C

144、BK-XTRA)11000110011010000Crdit Mutuel Group11000111010010000Crdit Agricole Groupe11000110010010100UBS Group AG(UBSG-SWX)1100011011000010049Top 50 Banks In The World Tackling AdaptationTHINKDOTRACKBANKPHYSICAL RISK SCENARIOSPHYSICAL RISK EXPOSURE ANALYSIS/ASSESSMENTALIGNMENT WITH NATIONAL/INTERNATION

145、AL ADAPTATION GOALSHIGH-LEVEL ADAPTATION ASSESSMENTADAPTATION PLANADAPTATION-NATURE NEXUSPHYSICAL RISK MANAGEMENTLENDING FOR ADAPTATION&RESILIENCENATURAL CATASTROPHE SUPPORTPHYSICAL RISK DATA GATHERINGCLIENT ENGAGEMENTPARTNERSHIPS AND ADVOCACYMONITORING AND EVALUATIONADAPTATION IMPACT METRICS IN USE

146、PHYSICAL RISK METRICS IN USEADAPTATION IMPACT TARGETS IN USEPHYSICAL RISK TARGETS IN USECaixaBank SA(CABK-BME)11000110010010100Norinchukin Bank11010111010000000Bank of America Corp.(BAC-NYSE)11000010111000100Royal Bank of Canada(RY-TSX)*811001010011000000Westpac Banking Corp.(WBC-ASX)*11001110100000

147、000State Bank of India(SBIN-NSEI)11001101100000000Ita Unibanco Holding SA(ITUB4-BOVESPA)11001010011000000Intesa Sanpaolo SpA(ISP-BIT)901000110111000000Socit Gnrale SA(GLE-ENXTPA)711000110010000100Commonwealth Bank of Australia(CBA-ASX)1111000011110000000Toronto-Dominion Bank(TD-TSX)*1100001101100000

148、0Barclays PLC(BARC-LSE)611000110010010000Bank of Nova Scotia(BNS-TSX)*11000010111000000NatWest Group PLC(NWG-LSE)11000010111000000ANZ Group Holdings Ltd.(ANZ-ASX)*1300000110111000000BNP Paribas SA(BNP-ENXTPA)311000110010000000Deutsche Bank AG(DBK-XTRA)11000110010000000DZ Bank AG11000011010000000Cana

149、dian Imperial Bank of Commerce(CM-TSX)*1100011001000000050Top 50 Banks In The World Tackling AdaptationTHINKDOTRACKBANKPHYSICAL RISK SCENARIOSPHYSICAL RISK EXPOSURE ANALYSIS/ASSESSMENTALIGNMENT WITH NATIONAL/INTERNATIONAL ADAPTATION GOALSHIGH-LEVEL ADAPTATION ASSESSMENTADAPTATION PLANADAPTATION-NATU

150、RE NEXUSPHYSICAL RISK MANAGEMENTLENDING FOR ADAPTATION&RESILIENCENATURAL CATASTROPHE SUPPORTPHYSICAL RISK DATA GATHERINGCLIENT ENGAGEMENTPARTNERSHIPS AND ADVOCACYMONITORING AND EVALUATIONADAPTATION IMPACT METRICS IN USEPHYSICAL RISK METRICS IN USEADAPTATION IMPACT TARGETS IN USEPHYSICAL RISK TARGETS

151、 IN USEBank of Montreal(BMO-TSX)*11000010110000000PNC Financial Services Group Inc.(PNC-NYSE)11000010010000000DBS Group Holdings Ltd.(D05-SGX)11000001001000000Citigroup Inc.(C-NYSE)501000010011000000National Australia Bank Ltd.(NAB-ASX)*01000000110000000JPMorgan Chase&Co.(JPM-NYSE)10000010010000000W

152、ells Fargo&Co.(WFC-NYSE)01000010000000000JAPAN POST BANK Co.Ltd.(7182-TSE)10000000010000000Morgan Stanley(MS-NYSE)10000000000000000Goldman Sachs Group Inc.(GS-NYSE)00000000000000000Capital One Financial Corp.(COF-NYSE)1500000000000000000U.S.Bancorp(USB-NYSE)0000000000000000051Contact us at researchc

153、limate- if youd like to improve the research or understand more about our climate adaptation solutionsJoin the discussion52Top 50 Banks In The World Tackling AdaptationThe Worlds Only Fully Integrated Physical Climate Financial Risk Platformwww.climate-ZAbout Climate X Climate X is the worlds only f

154、ully integrated climate risk platform,helping financial institutions to price,manage and build resilience to climate change impacts on the built environment.We provide climate financial risk data to global banks and asset managers,defending global economic stability against the impacts of climate ch

155、ange.Climate X is redefining resilience against climate change.Our innovative solutions have transformed the approach of businesses towards climate challenges,enabling them to build and retrofit structures for a sustainable future.By translating carbon emissions pathways into financial impacts,we he

156、lp drive a significant shift in the financial sector.Banks and asset managers are now using their insights to drive positive societal change,transforming investment strategies,risk assessments,and preparation for the financial effects of extreme weather.CONTACT US:enquiriesclimate-CONTACT US:enquiri

157、esclimate-Awarded and seen in media by:“Collaborating with Climate X,we will equip our clients with vital data which will inform their Net Zero strategIes and accelerate their response to climate-related risks.”Louise Brett Head of FinTech and Financial Services Innovation,Deloitte North and South E

158、urope,ZCONTACT US:enquiriesclimate-CONTACT US:enquiriesclimate-“I have been really impressed with their thoughtfulness and innovation in developing climate risk solutions.Climate Xs commitment to addressing climate challenges resonates strongly with my own vision for driving positive change on a glo

159、bal scale.”David Carlin Former Head of Risk at United Nations Environment Programme Finance Initiative(UNEP FI)This is bigger than us Were driven by a purpose thats much bigger than any of us.There are few challenges more significant than climate change,but the cutting-edge technology developed by u

160、s can help organizations to become more resilient.Understanding that quantifying and understanding risk is the key to building climate resilience,we have the right tools for financial institutions to assess climate risks and opportunities and effective management and support the transition towards a

161、 lower-carbon economy.To do this,we provide global coverage of climate risk data by combining science&econometrics to deliver climate risk analytics.Regulatory Compliance&Climate Disclosures:Climate X projects physical risks 80 years into the future,designed with the new regulatory landscape in mind

162、-including ISSB,ICAAP and stress testing/scenario analysis requirements.Advanced Analytics:Understand data more efficiently,including identifying drivers and isolating significant risks.Physical Risks Worldwide for 1.6bn Assets:Identify exposure to significant risk types and quantify real-world cost

163、s including asset valuation impacts upside and downside.Business Decisioning:Reflect climate-related risks into pricing,acquisition strategy and more.ZToolsDecision-Useful Tools:Allow senior leadership to act on the outputs produced by the assessment tool to sculpture climate strategy,invigorate new

164、 policies and improve client engagement.ORIGINATIONS,PRODUCT/PRICING,CLIENT ENGAGEMENTSTRESS TESTING AND SCENARIO ANALYSISCLIMATE RISK DISCLOSURES AND REGSIntegrating climate risk into decision making/due diligence,pricing and value-add client engagementWhere is my risk today,how does it evolve over

165、 time,mitigation strategyAnnual reports,ISSB,ECB,SFDR,EU Taxonomy and other statementsDisclosure-Useful Tools:To meet regulatory or other external disclosure requirements,they can be utilized for TCFD reporting,climate stress/scenario testing or other disclosures.Commitment-Useful Tools:These tools

166、enable target-setting for financial institutes and help organizations to monitor the progress of reaching specific targets.“When any new wave of technology comes to market,theres always one company that looks like the clear winner,and I believe Climate X is leading the pack.Spectra is the most compr

167、ehensive,easily accessible risk management solution available on the market-theres nothing like it.Bob Wigley Chairman of UK FinanceCONTACT US:enquiriesclimate-ZOur World Class Talent Team come from:The Team A team that can talk your language-our extraordinary and diverse team boasts decades of expe

168、rience covering various specialisms,including scientists,data engineers,finance experts,and creatives.Our team is passionate about making real change globally with an understanding of what regulatory and policy requirements you need to meet to contribute to the long-term success of your business by

169、preparing for climate risks.Lukky Ahmed,CEO&Co-FounderKamil Kluza,COO&Co-Founder“As risk experts,finding climate risk data was easy.To trust it and understand it was another story.Climate X is bringing the best of data science to finance experts”CONTACT US:enquiriesclimate-ZPhysical Risks&Losses Cli

170、mate Xs Spectra is an award-winning on-demand revolutionary climate risk data analytics platform,delivering location-specific risk ratings and climate-adjusted loss estimates between now and 2100 worldwide under multiple climate emission pathways.The platform enables financial institutes to meet reg

171、ulatory compliance and build resiliency by incorporating climate-related risks into investment strategies,risk management frameworks and business decision-making processes,turning future risks into opportunities.Our solution Spectra maps addresses directly to the probability and severity of all haza

172、rds linked to over 1.5bn properties worldwide,and translates physical risks from major hazards into Asset Valuation impact and Corporate Site level Business Disruption Revenue ImpactsCONTACT US:enquiriesclimate-ZOur multi award-winning SaaS platform Spectra drives value for globally leading financia

173、l service institutionsAs awarded and seen in media byIndustry leaders trust Climate Xand more.CONTACT US:enquiriesclimate-ZIdentify climate adaptation opportunities x3000 faster without third-party dependencies Become hyper-reactive by speeding up transaction closures,building asset resilience and o

174、utpacing your competition confidently.Adapt provides instant access to asset-level climate risk data and forecasts return on investment(ROI)for planning and implementing adaptation solutions.ZDe-risk Assets Physical Risk through Climate Adaptation Dont wait to know your adaptation capacitiesIntegrat

175、e Climate Adaptation to your Investment Cycle with Climate X Adapt and the convenience of on-demand data.In few clicks,you can run a full risk assessment,explore adaptation options and download the data,no need for costly consultants which can slow down deals.Quickly progress through your Acquisitio

176、n or Due Diligence process with Adapt,saving time and resources.Simply log in and access the data you need to make decisions-fast.The outdated approach to assessing climate adaptation measures involves leveraging a team of consultants.Projects can take weeks to mobilise,resulting in deal slowdowns o

177、r loss of deals altogether.Generate a climate adaptation report in as little as 60 seconds with our easy-to-use tool,Adapt.You can access the web application on demand,upload your asset and download the data you need for an Adaptation report in a minute or so.Built on international guidancesOur plat

178、form was built with rigourous compliance in mind-based on ISO 14090/14091,as well as UNFCCC,EU Taxonomy and Technical Guidance.Our recommendations are aligned with the above regulations,so you can ensure compliance and drive resilience in your portfolio.ISO 14090-2019 ISO 14091 -2021EU TaxonomyAsses

179、sing risks/vulnerabilitiesAdaptation managementData AnalystConsultant reporting($)Late Adaptation report readyreport readyUpload an adress In The World Tackling Adaptationwww.climate-Contact us:enquiriesclimate-UNITED KINGDOM21 Great Winchester Street,EC2N 2JA London,EnglandUNITED STATESRockefeller Center 1270 Ave of the Americas,7th Fl New York,NY 10020