Global Financial Regulators Pivot to Physical Risks, EPA Shutters Science Office, Geospatial Tech Tie-Up, and More

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Global regulators plan to investigate how extreme weather events and patchwork insurance coverage may affect the financial system, even as countries diverge on the significance of climate threats to lending and investment institutions.

In a status update on addressing climate risks, the Financial Stability Board (FSB) said its members would continue to evaluate how analysis of physical risks and gaps in insurance coverage “may contribute to a better understanding of financial stability risks.”

The report follows an acrimonious meeting of the global regulatory panel in June, when a US Treasury official argued that climate change should only be considered if there is proof of an imminent financial stability risk, according to Bloomberg reporting. He was opposed by the representatives for France, the Netherlands, and Canada, among others.

Last week’s report reflects the clash between FSB members. “[T]here are a wide range of views on the approach that should be taken to potential climate-related financial risks. While many members feel there is a need for more work, some members feel that the work completed to date is sufficient,” it reads. Notably, the report does not include discussion of potential future regulatory or supervisory measures, or of new macroprudential tools for countering climate-related financial stability threats.

Julia Symon, Head of Research and Advocacy at European think tank Finance Watch, warned on LinkedIn that the FSB’s new approach “weakens incentives for lagging jurisdictions, reduces multilateral pressure to act, and sidelines the possibility of preventing the next financial crisis.”

However, the document does claim that members are “starting to focus more on enhancing resilience” to climate physical risks through “adaptation measures and addressing insurance protection gaps.” As evidence for this shift, it highlights the Basel Committee on Banking Supervision’s prioritization of extreme weather risks to financial stability and efforts by the World Bank and International Association of Insurance Supervisors to address shortfalls in natural catastrophe insurance coverage.

G20 Finance Ministers and Central Bank Governors wrapped a two-day meeting in South Africa last week with a communiqué endorsing the integration of climate adaptation into the global financial architecture. Officials acknowledged progress on including “adaptation and resilience into the voluntary transition plans of financial institutions and corporations”, adding that these “may support vulnerable sectors in moving towards sustainable and climate-resilient economies.” They also said they “looked forward” to further investigations into “effective funding mechanisms for adaptation” and country-specific solutions to bridging “natural catastrophe insurance protection gaps.” (G20)

Extreme weather events are driving sharp, short-term food price spikes around the world, according to new research from the Barcelona Supercomputing Center. These include a more than 80% jump in onion prices in India following an extreme heatwave, and a 22% hike in UK potato prices in the wake of extreme winter rainfall. Unlike previous studies focused on long-term inflation, this research underscores how specific crop prices respond rapidly to localized climate shocks, often within months. (Barcelona Supercomputing Center)

The European Investment Bank (EIB), Dutch lender Rabobank, and asset finance company DLL have launched a €1bn (US$1.2bn) funding initiative aimed at enhancing sustainability and agricultural projects across Europe. Rabobank will borrow €250mn (US$291mn) from EIB and put up the same amount of its own capital to invest in Dutch SMEs and mid-cap companies that are focused on sustainability and agriculture. At least 40% of investments are earmarked for climate-relevant investments, and another 40% for bioeconomy sectors, including agriculture. DLL will borrow and match the same amount to streamline access to finance for small- and medium-sized businesses across the EU. (European Investment Bank)

The UK government has shelved plans to develop a green taxonomy, which was intended to identify sustainable investments and drive capital towards climate adaptation and mitigation. The government argues it would have added little value to investors, saying it will instead prioritize other industry-recommended reforms to boost sustainable finance. The decision is part of the UK Chancellor’s broader “Leeds Reforms” to enhance financial services competitiveness, including new regulatory goals for asset management and steps to grow retail investment. (UK Treasury)

The Australian government has pledged A$76mn (US$50mn) to 54 projects under the Climate-Smart Agriculture Program, of which 17 are focused on climate adaptation. The funding, provided by the Natural Heritage Trust, is intended to “build capacity and resilience to climate change, manage emissions, improve soil health and protect natural capital.” The Climate-Smart Agriculture Program has a five-year term ending in 2028. (Australian Department of Agriculture, Fisheries and Forestry)

India’s central bank is set to finalize climate risk disclosure rules for financial institutions, according to Reuters. The Reserve Bank of India (RBI) will require banks to begin voluntarily disclosing climate-related financial risks in 2027, with mandatory compliance from 2028. Among the information to be reported are their loan books’ exposure to floods, heatwaves, and other extreme weather events. Banks will also be expected to conduct periodic stress tests to estimate the impact of climate shocks on the economy and their own investment and lending portfolios. (Reuters)

The African Development Fund has approved a US$9.44mn grant to bolster climate resilience in West Africa’s rice value chains. The initiative will distribute climate-resilient seeds to 11,000 farmers, provide technical and networking support to small businesses, and enhance climate services and early warning systems for up to 2 million people. Ghana, Mali, Côte d’Ivoire, and ten other nations will be the prime beneficiaries of the scheme. (African Development Bank Group)

Jeff Bezos has tapped longtime Amazon executive Tom Taylor to lead the US$10bn Bezos Earth Fund. Taylor formerly oversaw Amazon’s Alexa voice assistant unit and third-party seller services. The Bezos Earth Fund has distributed US$2.3bn in grants since launching in 2020 with a goal of deploying all capital by 2030. On LinkedIn, Taylor said he wants to apply “long-term thinking, technical curiosity, and excellent execution” to the role. (LinkedIn)

The US Environmental Protection Agency (EPA) is shuttering its Office of Research and Development (ORD), a key driver of analysis on climate risks, air and water pollution, and wildfires.

The move is part of a broader “reduction in force” announced on Friday that will cut the agency’s headcount by 23% relative to January levels and save an alleged US$749mn.

The ORD is the cornerstone of the EPA’s scientific infrastructure, responsible for conducting in-house research and supplying grants to universities and private firms to further understanding of climate and environmental risks. In its place, the agency is launching a new Office of Applied Science and Environmental Solutions, which it says will strengthen the connection between science and policy. 

To fill this office, the EPA says it is hiring hundreds of new scientific and technical staff. However, the agency has already lost a large number of personnel after axing its Environmental Justice and Diversity, Equity, and Inclusion units and initiating a voluntary buyout program. Earlier this month, the EPA’s first Director of the Office of Climate Adaptation and Sustainability, Benjamin DeAngelo, said he left the agency after taking such a buyout.

The restructuring has triggered sharp backlash from lawmakers, scientists, and environmental groups, who argue it will cripple the EPA’s ability to conduct independent research and respond to emerging threats. California Representative Zoe Lofgren called the move a “travesty” with “generational impacts” on public health, while Tim Whitehouse of Public Employees for Environmental Responsibility warned that the closure would “devastate the country’s ability to protect human health and the environment.”

NASA says it will not host the National Climate Assessments, effectively cutting off public access to the periodic scientific reports on climate risks to the US. The assessments were removed from their former home at globalchange.gov earlier this month. NASA says it has no obligation to host the data, reversing a prior pledge to maintain access. (Associated Press)

Democratic lawmakers have reintroduced the Climate Change Health Protection and Promotion Act, which would reestablish the Office of Climate Change and Health Equity within the Department of Health and Human Services (HHS). The bill would also mandate a federal strategy to protect public health from climate impacts, including extreme heat, wildfire smoke, and disease outbreaks. Moreover, HHS would be compelled to develop a National Strategic Action Plan and expand data monitoring, research, and technical support to local health agencies. (Senator Ed Markey)

European Parliament leaders have criticized the European Commission’s proposed long-term budget, arguing that its meager 1.26% gross national income ceiling does not make “sufficient funds” available for climate adaptation and other priorities. Parliamentarians want leaders to propose a stronger revenue base using new resources such as a tobacco excise duty and e-commerce duties. (European Parliament)

The UK’s climate is shifting rapidly, with record-breaking heat and rainfall extremes becoming the new normal, according to the Met Office’s latest State of the UK Climate report. The 2015–2024 decade was 1.24°C warmer than the 1961–1990 baseline, and the UK’s hottest days are now up to four times more frequent, the report states. It urges policymakers and infrastructure planners to prioritize adaptation as weather volatility accelerates. Co-leader of the Green Party, Adrian Ramsay MP, said the report showed that the government should put climate resilience on a “statutory footing”, and mandate local authorities and infrastructure providers “to carry out climate risk assessments for all projects.” (UK Met Office / Green Party)

Australia has launched the Australian Adaptation Database, which catalogs more than 700 local, state, and industry-led initiatives: from artificial reefs curbing coastal erosion in Victoria to urban greening and cooling projects in Adelaide. The database is a product of the National Environmental Science Program (NESP) Climate Systems Hub Project on Enabling Adaptation Best Practice, and will be updated with new additions on a regular basis. (Australia Adaptation Database)

Two geographical data heavyweights are joining forces to help island nations make better decisions for climate resilience and sustainable development. 

Fugro, a geodata services company, and Esri, the Geographic Information System (GIS) software giant, said they would work together to craft geospatial tools to inform climate-threatened countries resilience and adaptation plans. The collaboration will bring together the former’s high-resolution earth observation surveys and predictive modeling with the latter’s mapping and location intelligence software. The initial idea is to produce easy-to-use datasets for Small Island Developing States (SIDs).

Commenting on the tie-up, Dr Didicus Jules — Director General of the Organisation of Eastern Caribbean States (OECS) — said insights derived from geographic and geospatial data are needed to empower its members to “make informed, timely and transformative decisions.”

The companies’ data solutions are intended to be scalable, and applicable to other sectors and regions in need of climate resilience intelligence — like offshore wind and nature conservation.

Barry Callebaut, the world’s largest chocolate manufacturer, has partnered with the Zurich University of Applied Sciences to advance the cultivation of cocoa cells. This is a lab-based approach to growing cocoa in controlled environments, which could help address gaps or interruptions to cocoa supply chains amidst intensifying climate shocks. Cocoa prices surged 400% last spring as extreme temperatures curbed production in key growing regions in West Africa. (Barry Callebaut)

UK-based climate tech startup Barocal won the US$1mn top prize at this year’s TERA-Award for its solid-state cooling technology. Barocal, a spin-out from the University of Cambridge, uses solid barocaloric materials, which produce temperature changes when put under pressure, to create cooling solutions for homes, businesses, and data centers. The company says its systems achieve up to three times the energy efficiency of conventional refrigerant gas units, making it a promising adaptation solution. (South China Morning Post)

Puna Bio, an Argentine startup developing climate-resilient agricultural biologicals, has secured additional funding from the Gates Foundation to close its Series A round. The deal, the terms of which were undisclosed, will support the company’s international expansion, particularly into sub-Saharan Africa and South Asia. Puna’s core technology integrates extremophiles, which are microorganisms adapted to extreme environments, into seed coatings and other products that help crops to withstand climate stressors like heat and drought. (AgFunderNews)

The rise of chief resilience officers in US cities: A necessary evolution for managing the complex urban challenges associated with disasters? (Cities)

Advancement in urban climate change assessment and mitigation technologies (International Journal of Environmental Service and Technology)

East Asian aerosol cleanup has likely contributed to the recent acceleration in global warming (Communications Earth & Environment)

The impact of green walls on outdoor thermal comfort in residential areas under warm weather conditions: A case study (Urban Climate)

Barrier removal is a strategy for climate resilience (Utah State University)

Advancing new metrics for wildfire smoke exposure: Case study in Alaska to bridge public health, climate adaptation, and fire management (Environmental Research Letters)

The future of poverty: Projecting the impact of climate change on global poverty through 2050 (World Bank Group)

The social costs of solar radiation management (npj Climate Action)

Bracing for impact: A systems strategy for climate resilience in the US (Systemiq)

Thanks for reading!

Louie Woodall
Editor