Green Central Banks Back Adaptation Plans, World Court Issues Climate Opinion, China's AI Early Warning System, and More

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Financial institutions should incorporate adaptation actions into their transition plans to better manage climate risks and steer more capital to climate-proofing efforts, a new paper from a club of green central banks says. 

The report out of the 147-strong Network for Greening the Financial System (NGFS) outlines a framework for integrating adaptation into the strategic climate plans of banks, insurers, and other financial firms. The idea is to harden companies against worsening climate shocks and stimulate adaptation investment.  “[T]he financial sector faces a growing burden of direct and indirect physical risk exposures which requires proactive risk management and the integration of adaptation measures into strategic and operational planning,” it reads.

The paper includes ideas on how to merge adaptation considerations with the five “pillars” of transition plans. The NGFS recommends that companies set two adaptation-related objectives: one on identifying and managing their physical climate risk exposure and another on adaptation opportunities.

It further proposes companies adopt implementation and engagement strategies to address the physical risks they identify and influence third parties on adaptation action. For example, one implementation action for a bank could be crafting tailored loan products for climate-resilient infrastructure. On the engagement side, the NGFS says lenders and investors could sign up for public-private ventures that support regional or sector-wide resilience. Companies are also encouraged to strike up dialogues with their borrowers and investees to better understand their physical risks, and how these could flow through to their own balance sheets.

Adding adaptation-related metrics and targets to transition plans is described as the trickiest aspect of the planning process by the NGFS, as “there are limited clear, consistent and quantitative adaptation policy targets” to which institutions can align. To address this challenge, the group suggests companies adopt “a maturity pathway” approach. This would see institutions start by collecting data and building a picture of their portfolios’ physical risks. They would then quantify the financing being deployed on adaptation solutions to counter these risks. Next, they would monitor the effectiveness of these solutions in protecting their climate-vulnerable assets.

The NGFS says financial institutions could use existing indicators for credit, market, operational, and liquidity risk to anchor their adaptation metrics and targets. “By beginning with data stocktakes and evolving towards outcome- and impact-based metrics, institutions can meaningfully track their adaptation journey and better align internal strategies with stakeholder needs and expectations,” the paper says.

The central banking group adds that financial institutions and corporations need an “enabling environment” in the form of supportive governments and policy frameworks to maximize the effectiveness of adaptation planning. 

Malawi has received a US$3.4mn parametric insurance payout from the African Risk Capacity (ARC) in the wake of a crippling drought that threatens hundreds of thousands with hunger. The money will support both emergency food assistance and long-term livelihood recovery, including winter cropping with drought-tolerant seeds. Malawi’s access to the ARC program was paid for by the African Development Bank, which paid the premium for a Traditional Sovereign Drought Policy, and Germany’s KFW, which paid for an Anticipatory Insurance Policy. (African Risk Capacity)

The European Central Bank is considering a fine against Credit Agricole for not meeting climate risk management expectations, according to Bloomberg, in a sign the regulator is committed to enforcing its climate-related standards. The bank, France’s second-largest lender, is contesting the penalty, with a final decision pending. The outcome may set a precedent for how climate-related regulatory enforcement unfolds across the EU banking sector. (Bloomberg)

Climate-driven shocks are inflating UK food prices, exposing the country’s reliance on fragile global supply chains vulnerable to extreme weather events, according to a new report on “climateflation” from progressive think-tank the Autonomy Institute. Rising temperatures and violent weather in key export regions like Spain, France, and Brazil, as well as within the UK itself, are set to push domestic food prices up by as much as 34% by 2050 under a high-emissions scenarios. Poor households face the steepest impacts, and could lose over £1,200 (US$1,600) annually by mid-century. (The Autonomy Institute)

States are liable for the damage caused by their greenhouse gas emissions, the International Court of Justice (ICJ) has said, a declaration that could open a new legal front in the long-running effort by poor countries to acquire adaptation and loss and damage finance from their richer, and more polluting, peers.

In the 140-page advisory opinion issued last Wednesday, ICJ judges argue that states have “a duty to prevent” those actions causing significant harm to the climate system, and also a “duty to co-operate” across national boundaries to prevent the same. Notably, these duties apply to all states — and not only to those that signed the 2015 Paris Agreement — since climate harms impinge on a wide array of interlocking international laws and treaties. In other words, countries like the US that have left the Paris Agreement are not off the hook.

The court says a breach of the “duty to prevent” represents an “internationally wrongful act” that could result in legal consequences, including the payment of reparations where a “causal nexus” can be shown between a state’s harmful actions and injury incurred by another state. This finding could galvanize more lawsuits by climate-vulnerable nations ravaged by extreme weather events, sea-level rise, prolonged droughts, and other shocks against high carbon-emitting states. These in turn could produce compensation payments to make up for climate damages and prepare for future impacts.

While the opinion is non-binding, it clarifies existing international law, and could be a “powerful advocacy tool” that people can use to “demand…more ambitious action on climate change”, says Lea Main-Klingst, a lawyer with the environmental law charity ClientEarth.

The ICJ opinion concludes a more than two-year process initiated at the request of the tiny Pacific island nation of Vanuatu. Judges received 91 written statements and 62 written comments on the questions, and over 100 oral statements from states and international organizations — making this the most participated-in proceeding in the court’s history.

US Environmental Protection Agency Administrator Lee Zeldin said he is moving to repeal the 2009 endangerment finding, a cornerstone of federal climate rulemaking that identifies greenhouse gases as a threat to public health. The finding has been used to justify a range of climate regulations targeting vehicle tailpipe emissions, coal- and gas-fired power plants, and methane emissions from oil fields. Revoking it could strip the EPA of its authority to regulate climate-warming gases altogether, despite overwhelming scientific consensus on their health and environmental impacts. The proposal is under review by the Office of Management and Budget, and would likely be challenged in the courts by states and environmentalists. (NPR)

The US Securities and Exchange Commission has asked the Eighth Circuit to resume litigation over its contested climate-risk disclosure rule, even though it has said it will not revisit or defend the regulation. Significantly, it has not said whether it would uphold and enforce the rule if the litigation doesn’t go its way. Adopted last year under a Democratic majority, the rule would require public companies to report material climate-related risks and potential adaptation actions. However, under a Trump-aligned leadership, the Commission has withdrawn its legal support, leaving Democratic states as the sole defenders in court. (Eighth Circuit of Appeals)

Two top officials from the National Oceanic and Atmospheric Administration — Steve Volz, head of the agency’s satellite division, and Jeff Dillen, deputy general counsel — were abruptly placed on administrative leave this week, raising alarms just days before a Senate committee vote on Trump nominee Neil Jacobs to lead the agency. Both men previously investigated Jacobs for violating NOAA’s scientific integrity policies during the 2019 “Sharpiegate” scandal, when Trump falsely claimed Hurricane Dorian would strike Alabama. While NOAA claims the personnel actions are unrelated, the timing has sparked concerns of political retaliation, particularly as Volz played a pivotal role in defending NOAA’s independent satellite operations and overseeing a multibillion-dollar next-gen weather satellite program. (CNN)

Nearly half of Australian businesses are unprepared for the country’s new mandatory climate reporting rules, according to a joint report by RMIT Online and Deloitte Access Economics. The study finds 43% of firms lack the expertise needed to comply with climate disclosure laws coming into force this year. At the same time, over half expect climate change to significantly affect their finances within the next decade — pointing to a skills gap that could have material implications for firms. (RMIT)

China has unveiled an AI-enabled early warning system for extreme weather events and disaster preparedness.

MAZU, named after a Chinese sea goddess, fuses real-time meteorological forecasts with multi-hazard monitoring tools and a Large Language Model (LLM) system that can produce detailed, personalized bulletins for various actors in the emergency response space. To maximize the systems’ accessibility, MAZU has three aspects: one for meteorological and emergency management professionals, one for industry-specific users, and one for the general public.

The system is part of China’s contribution to the UN’s Early Warnings for All Initiative, which seeks to improve the effectiveness and geographic reach of early warning systems. A 2024 report found that less than half of the Least Developed Countries and only one-third of Small Island States have sufficient systems in place.

MAZU-Urban is the first globally available product under the MAZU framework, providing climate risk data and forecasts for cities and other urban environments. China says MAZU has been piloted in 35 countries since January across Asia, Africa and Oceania.

AI-powered sustainable finance finance start-up ClimateAligned has released brief.green, an online tool for automating the assessment of company reports against standards like IFRS S2, the EU Taxonomy, and SDG impact readiness. The product is targeted at sustainability professionals looking for trustworthy analysis of public disclosures. New users can take advantage of five free assessments by signing up at brief.green. (ClimateAligned)

Jupiter Intelligence, the climate risk analytics provider, has upgraded its ClimateScore™ Global platform with a suite of tools designed to help financial institutions quantify climate risk and model adaptation strategies with greater precision. The enhancements include ROI-based analysis of over 10 adaptation strategies in a new Adaptation Hub, entity-level risk modeling for funds and corporates, dynamic scenario simulations via MetricEngine, and a new subsidence damage model. These tools allow users to conduct organization- and asset-level climate risk assessments and test the ROI of specific resilience strategies before making investments. (Jupiter Intelligence)

The Agritech ClimAccelerator Singapore has announced nine early-stage startups for its inaugural Asia-Pacific cohort, focused on climate-resilient innovation in food and agriculture. The ventures, drawn from six countries, range from AI-powered climate intelligence platform LambdAI Space to energy-efficient cold chain company Polar Cold. All the companies have validated prototypes that are ready for commercial deployment. The ClimAccelerator is backed by Climate KIC and Better Earth Ventures. (ClimAccelerator)

Indicators of Global Climate Change 2024: annual update of key indicators of the state of the climate system and human influence (Earth System Science Data)

Assessing the risk of diseases with epidemic and pandemic potential in a changing world (Science Advances)

Anthropogenic climate change contributed to excess dengue risk related to hydrometeorological conditions in Brazil and China (One Earth)

Unprecedented continental drying, shrinking freshwater availability, and increasing land contributions to sea level rise (Science Advances)

Frontiers 2025: The Weight of Time (UN Environment Programme)

Thanks for reading!

Louie Woodall
Editor