• Climate Proof
  • Posts
  • Davos Deprioritizes Climate, PwC and Allianz Surveys Reveal Corporate Climate Risk Thinking, and More

Davos Deprioritizes Climate, PwC and Allianz Surveys Reveal Corporate Climate Risk Thinking, and More

The summit's headliners may have skirted the topic, but Davos did yield some fresh thinking on adaptation

AI-generated via DALL-E

A round-up of climate adaptation and resilience content out of the World Economic Forum’s annual shindig, breaking down PwC’s Annual CEO Survey and Allianz’s Global Risk Barometer, the United Nations Environment Programme Finance Initiative floats a new ‘Risk Centre’, the Intergovernmental Panel on Climate Change agrees its seventh assessment cycle workplan, and a look into prairie management for Innovation of the Week.

Adaptation Almost Absent at Davos

At the glitziest conference of them all, climate adaptation had little more than a bit role.

The theme of this year’s meeting of the World Economic Forum (WEF) in Davos was “Rebuilding Trust” — in the future, in our collective ability to overcome challenges, and in each other.

You’d think this was a theme ready-made for climate change. But while part of the agenda was given over to “A Long-Term Strategy for Climate, Nature and Energy”, the conference generated little in the way of attention-grabbing climate headlines.

The New York Times put it best:

“The Davos program changes from year to year, but the agita that animates this gathering is always the same: The issues at the top of the agenda are a) the ones that powerful people are most afraid of, and b) the ones they think they can make money from.


Despite the fact that 2023 was the hottest year in history, despite the fact that the oceans are experiencing a prolonged heat wave, despite the fact that extreme weather is wreaking havoc around the globe, the Davos set remains consumed with other crises du jour.”

Climate Forward, The New York Times

However, on the climate adaptation and resilience front, there were a few developments worth highlighting. 

First, a report out of the WEF’s Tech for Climate Adaptation Working Group on the technologies that are becoming “mission-critical” climate adaptation tools. This explores how artificial intelligence, satellites, advanced computing capabilities, and other innovations “can enhance industry resilience, protect ecosystems and safeguard human well-being.”

The report also touches on how adaptation can be “repositioned” to attract private capital: “One way of increasing financial flows into climate adaptation is to change its framing — to emphasize the linkages between climate adaptation and innovation.”

True, it’s a little light on how to do this in practice, but as I wrote last week, by positing a kinda-sorta “taxonomy” of investments the report could spark conversations among investors on where best to direct their adaptation dollars.

Elsewhere at Davos, leaders including Kristalina Georgieva of the IMF and Jesper Brodin of IKEA discussed systemic responses to climate change that produce a “nature-positive” future.

Climate risk and finance issues also got an airing on the panel “Are the Financial Risks of Climate Change Underpriced?” with climate science superstar Katherine Hayhoe and maverick economist Professor Mariana Mazzucato joined by Swiss Re CEO Christian Mumenthaler and ING Group CEO Steven van Rijswijk.

This panel highlighted some of the key issues complicating climate risk management and finance mobilization. Mazzucato was in fine form criticizing how the current financial plumbing is impeding progress on climate mitigation and adaptation:

Later, Steven van Rijswijk got to the heart of the climate risk quantification problem:

“[Climate risks] they are underpriced and the reason is our loans and the pricing of our loans assumes known quantities of risk. And that is largely based on models, and these models, they look at risks that appeared in the past, and these models also have 10 years of data. And when we look at climate risk we don’t have that data or we have not captured this data and so the sustainability risks are current and forward-looking risks and they are not correctly priced in these models. So as a matter of principle the risks of climate change are underpriced because they are forward-looking.”

Steven van Rijswijk, ING Group

Here, van Rijswijk is reflecting back the climate risk management orthodoxy popularized in the Bank for International Settlement’s “The Green Swan”, which claims the financial industry needs an “epistemological break” to free itself from the old, backward-looking approach to risk management and embrace a new style that can deal with radical uncertainty. If nothing else, this suggests the leader of one of Europe’s biggest banks is open to new ways of doing things when it comes to climate risk and financing.

And perhaps that’s the most we can expect from Davos, a summit that is ultimately more about framing issues than confronting them. While no huge steps forward were made on climate adaptation and finance, the fact they were still part of the conversation is something to hold onto.

CEOs Sound Off on Climate Risk

A not insubstantial slice of company executives’ time seems to involve telling survey makers what’s on their mind. In January, the rest of us benefit from the fruits of these corporate therapy sessions. Earlier this month we saw the output of the Global Risks Perception Survey, and now we have the results of PwC’s Annual Global CEO Survey and Allianz’s Risk Barometer to feast upon.

Climate risk features prominently in both, but the findings aren’t pretty. PwC’s poll shows that 29% of CEOs don’t plan to take action to protect their physical assets from climate risks, and 31% do not plan to incorporate climate risk into their financial planning. 

Presumably, these CEOs believe either a) climate risk is not material to their companies, or b) that the climate risk assessments they have done indicate they do not need to take corrective action. Of course, there’s also the possibility of c): climate risks being willfully overlooked.

The Allianz Risk Barometer doesn’t paint executives in the best light, either. “Natural catastrophes” took the third spot in the rankings for 2024’s top business risks, with 26% of respondents citing it as a top concern. However, only 18% list “Climate change” itself as a top risk. Of the 544 respondents who say so, 62% claim they fear acute risks the most out of potential climate impacts.

However, just 32% say they are taking measures to improve the ability of physical sites to withstand extreme weather events, while only 40% are “creating contingency plans for climate-related eventualities”, like disaster response and recovery.

It’s worth making the point that the outputs of these respective surveys are the products of very different inputs. PwC’s pollsters interviewed 4,702 CEOs across 105 jurisdictions. In contrast, Allianz’s covered 3,069 “risk management experts” from 92 countries and territories. This helps explain the discrepancy in reported climate risk readiness across the surveys.

The question is whether Allianz’s or PwC’s survey best reflects what’s actually going on at large companies in terms of their climate responses. You could argue that CEOs, being some distance from the day-to-day grind of actual risk management, may be less reliable than the “risk management experts” surveyed by Allianz. On the flipside, the latter group may be more likely to exaggerate the maturity of their climate responses. After all, admitting to neglecting a major risk area is not a good look.

Of course, there’s another possibility — neither survey provides an accurate view. Ultimately, the actual preparedness of companies will be tested through their resilience to future climate shocks. Then we’ll see which stakeholders have been telling the truth about their risk management practices.

IPCC Greenlights Adaptation Program

The Intergovernmental Panel on Climate Change (IPCC) writes the bibles of climate science. Every few years it curates and summarizes the latest scientific papers and produces an updated assessment report (AR) covering the drivers of climate change, its impacts and future risks, and the benefits of adaptation and mitigation. These ARs, crucially, reflect the consensus of all governments represented through the United Nations. There’s no way to dismiss them as partisan, biased, or illegitimate.

On Saturday in Istanbul, the IPCC agreed on a work plan for the seventh assessment cycle. Significantly, the IPCC has promised to revise its 1994 Technical Guidelines on impacts and adaptation, and produce adaptation indicators, metrics and guidelines, all of which will be published as a distinct product. 

This should be welcome news to the climate risk and adaptation community. After all, the current guidelines are 20 years old, and both humanity and the global climate have changed much in this period. The output of this work stream should furnish policymakers, businesses, and financial institutions with the tools to estimate climate impacts and adaptations, and to make such assessments comparable across regions and sectors.

However, it may be some time before the fruits of this work ripen. The IPCC press release says the AR7 synthesis report will be produced by late 2029. The individual working group reports will be released before then, but it's not clear when the standalone adaptation report will see the light of day. 

UNEP FI Floats Climate-Nature Risk Center

The financial industry may soon have a new favorite place to load up on climate-nature risk expertise and tooling.

Last week, the UN Environment Programme Finance Initiative (UNEP FI) previewed its “Risk Centre”,  a one-stop-shop for banks, insurers, asset owners, and other entities to tackle climate, nature, and sustainability risks. David Carlin, UNEP FI’s Head of Climate Risk, posted that the “Risk Centre” will:

  • Provide a systematic approach to risk with in-depth working groups on climate, nature, and other sustainability risks.

  • Accelerate tool development and improved analysis through collaboration with expert partners.

  • Function as a one-stop-shop for financial actors looking to explore resources around environmental risks.

  • Be a convening space for peer exchange and the sharing and creation of good practices.

In part, it sounds like a reorganization of the sprawling climate- and nature-related risk workstreams that UNEP FI and its various affiliated finance alliances have sponsored in recent years. The Initiative has pushed out content at a prodigious rate, such that it may now be challenging for practitioners to pick out what expertise or tools they need from the pile — making the formation of a new hub sensible.

By consolidating once-separated topic areas — net zero, adaptation, biodiversity, etc — under a single roof, UNEP FI may also be emphasizing the interconnections and dependencies between them.

In turn, this may be a signal to financial institutions that they should treat these issues as parts of an overarching whole, rather than in separate silos.

💡Innovation of the Week💡

The US is famed for its tallgrass prairies, which European colonists exploited to transform the country into an agricultural powerhouse. The legacy of their over farming and development is a much reduced — and much more fragile — network of grasslands that are among the world’s most endangered ecosystems.

This is a problem, as prairies serve as natural bulwarks against climate impacts, helping reduce soil erosion and increasing groundwater infiltration. They also have a role to play in climate mitigation, as they can store large amounts of carbon in their rich soils.

Small wonder that prairie restoration and conservation features in the Department of Interior’s recent Nature-Based Solutions Roadmap as one means of improving the country’s climate preparedness. 

But how to go about restoring these prairies? A recent article out of NonProfit Quarterly highlights the Nature Conservancy’s efforts to improve their resilience by increasing the diversity of plant species they host. The nonprofit set up a Seeds of Resilience tool, which aggregates plant species data from North Dakota, South Dakota, and Minnesota into a “common geodatabase.” This allows conservationists to map different species locations and locate seed sources they can then use to enhance genetic diversity in other regions. 

Greater genetic diversity equals greater resilience to disease and extreme climate shocks, ensuring prairie lands can continue to provide adaptation and mitigation benefits. Seeds of Resilience underscores how high-quality data, made readily accessible to all, is an essential part of the climate adaptation toolkit.

Other Stuff