Key Takeaways

• IFC is launching ClimaLab to help financial institutions manage climate risk in line with European Union regulations.
• Between 1980 and 2022, Europe suffered €650 billion in climate disasters.
• ClimaLab offers customised programmes to equip banks with the skills to assess climate risk and integrate sustainability into their management.

The International Finance Corporation (IFC) is launching ClimaLab in Europe, an initiative to provide financial institutions with the knowledge, tools and skills to manage climate risk.

This comes after Europe faced €650 billion in climate disasters between 1980 and 2022, or €15.5 billion a year. The financial sector has also felt the impact, with non-performing loan ratios rising by 0.37 percentage points after severe climate and environmental disaster events, according to World Bank research. As climate change intensifies, the European Union tells banks to put climate risk into their decision-making and prioritise sustainable finance.

To help banks strengthen their climate risk management, IFC is launching ClimaLab in partnership with the government of the Netherlands. ClimaLab is the first of its kind by a multilateral development institution, offering a range of climate-focused programmes to help banks get climate resilient and integrate sustainability into their management. The programmes are tailored to the specific needs of different regions.

The initiative will equip financial institutions with the skills to understand the impact of climate risk on their portfolio, identify sustainable investment opportunities and develop their transformation strategy.

"Climate change poses a significant financial risk to economies, and financial institutions play a crucial role in mitigating this risk," said Liliana Pozzo, IFC Sustainable Finance Advisory Services Manager Latin America and the Caribbean and Europe. "Through ClimaLab, we aim to empower banks and other financial institutions to not only navigate the complexities of climate risk but also seize the opportunities that arise from the transition to a low-carbon economy."

IFC is piloting ClimaLab with a few banks in the region to test the curriculum and materials. Interested financial institutions can apply to join future ClimaLab cohorts at climalab@ifc.org.

The European ClimaLab cohort will start in November and will focus on climate risk management in line with the Paris Agreement. ClimaLab has been developed by IFC in partnership with Management Solutions, an international business consulting firm. ClimaLab will help financial institutions assess climate risk, integrate the assessments into mandatory disclosures and sustainability reports and develop transition and adaptation strategies in line with regulatory requirements.

Follow KnowESG's Sustainable Finance news for regular news and views.

Discover an extensive network of ESG providers here

Check out KnowESG's latest ESG Course updates

Source: IFC