Italy Debuts Mandatory Climate Insurance, NY Superfund Law, and More

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Finance:

• Italy Introduces Mandatory Climate Insurance

• US$228bn Lost from 2024’s Costliest Climate Shocks 

Policy:

• NY Governor Signs Climate Superfund Law

• US Financial Watchdogs Make Progress on Climate Risks

• Australia’s Mandatory Climate Disclosure Regime Begins

Tech:

• Climate and Weather Intelligence Firm Raises US$6.4mn

Research:

• Another round-up of papers and journal articles on all things climate adaptation

Italy Introduces Mandatory Climate Insurance

As of January 1, every company in Italy has to buy “climate insurance” to protect its assets from the extreme weather risks and natural disasters that have become more frequent and severe thanks to global warming.

The law, passed in 2024, requires firms of all sizes to buy coverage against floods, storms, and other risks and obliges insurers to provide relevant policies — or face fines. The new regime is underpinned by a €5bn (US$5.2bn) reinsurance fund managed by a state-controlled financial institution.

Italy joins Spain and France in introducing a form of state-mandated climate insurance. Such rules were floated as one solution to closing the insurance protection gap in Europe in a recent Climate Resilience Dialogue, made up of insurance regulators and industry representatives. In the period 1980-2022 only around one-quarter of economic losses from natural disasters were insured in Europe, according to regulators.

US$228bn Lost from 2024’s Costliest Climate Shocks 

The ten most expensive climate disasters last year caused more than US$228bn in losses and claimed at least 2,000 lives, according to data analysis by Christian Aid.

Hurricane Milton, which ravaged the US east coast in October, was the single event that incurred the highest cost in 2024, at US$60bn, closely followed by Hurricane Helene, which blasted through the US, Mexico, and Cuba in late September. 

Typhoon Yagi was the disaster with the highest death toll, at over 800. This storm tore through southern China and Southeast Asia in September, flooding large swathes of Thailand, Vietnam, and Myanmar. Insured losses came in at around US$13bn. 

Most Expensive Climate Disasters Of 2024

Hurricane Beryl, which swept through Texas and the Caribbean in July, and Storm Boris — which unleashed floods throughout central Europe in September — also feature in the top ten, with financial tolls of US$6.7bn and US$5.2bn, respectively.

Christian Aid compiled the list using loss data from Aon, RBC Capital, and Morningstar DBRS. The nonprofit says that the cost estimates are based on insured loss figures only, meaning uncovered losses aren’t included. This means the true economic toll of each disaster is likely to be far higher than recorded.

Besides the individually named events, the list includes two groupings of storms and floods that have been pooled together. US convective storms over the course of the year inflicted more than US$60bn in losses and cost around 90 lives. Floods in China, including those that rampaged through the provinces of Guangdong, Guangxi, and Fujian in June and July, caused around US$16bn in losses and claimed over 300 lives.

The cost in lives and dollars of these climate-related disasters highlights “the importance of adaptation”, Christian Aid says, and also makes the case for investments in agroecology — sustainable farming practices — “which can withstand climate change better.”

In Brief

Bangladesh and the World Bank have signed US$900mn in financing agreements to bolster climate resilience and sustainable development in the Asian country. A US$500mn Green and Climate Resilient Development Credit is being supplied to facilitate policy reforms that enable green growth, address air pollution, support carbon market access, and bolster sustainable water and sanitation services. A US$400mn Resilient Urban and Territorial Development Project focuses on climate-resilient urban infrastructure, and aims to benefit 17 million people through investments in roads, bus terminals, green buildings, and more. (World Bank Group)

The Global Environment Facility (GEF) approved US$204.3mn in support of UN-backed development projects in 121 countries, many of which focus on building climate resilience and nature-positive solutions. These aim to benefit over 9.4 million people, restore thousands of hectares of land, and improve stewardship of 3 million hectares — an area roughly the size of Belgium. Over US$71.3mn of the total is being allocated to community-driven initiatives under GEF’s Small Grants Programme, which to date has financed some 30,000 community-led initiatives on climate, biodiversity, and conservation issues. Other funded programs are targeting sustainable tourism reforms in 14 countries, and expanded financial and insurance support for climate-resilient agriculture in eight nations. (UNDP)

New York State’s Department of Environmental Conservation announced over US$16mn in Climate Smart Communities (CSC) grants to municipalities, financed via the Clean Water, Clean Air and Green Jobs Environmental Bond Act of 2022. These grants will support projects aimed at enhancing infrastructure resilience, decreasing flood risk, and hardening communities against climate impacts, among other things. Grant awardees are allocating funds to a range of activities, from flood risk mitigation to improving pedestrian and bike infrastructure and expanding composting programs. (NY Department of Environmental Conservation)

The Coalition for Emerging Market Infrastructure Investment has launched its inaugural country platform in the Philippines, with the aim of accelerating infrastructure investment in the Southeast Asian country. The platform brings together government representatives, private sector leaders, and other stakeholders. The Coalition was convened by the nonprofit Indo-Pacific Partnership for Prosperity (IP3) and is co-chaired by financial institutions Global Infrastructure Partners and KKR. Other members include Allied Climate Partners, BlackRock, Brookfield, GIC, The Rockefeller Foundation, and Temasek. (Indo-Pacific Partnership for Prosperity)

NY Governor Signs Climate Superfund Law

New York Governor Kathy Hochul signed into law a Climate Superfund Act that will force fossil fuel companies to pay up to US$75bn for adaptation and recovery costs in the Empire State.

Under the new legislation, ExxonMobil, Chevron, ConocoPhillips, and other oil and gas majors will be fined damages in proportion with the amount of climate pollution they pumped into the atmosphere from 2000 to 2018. Fines are capped at US$3bn annually for the next 25 years. Collections will be made starting in 2028.

Hochul said the Act will “hold polluters responsible for the damage done to our environment” and finance “major investments in infrastructure and other projects critical to protecting our communities and economy.”

In 2023, New York taxpayers spent US$2.2bn, or about US$300 per household, for infrastructure repairs and resilience projects, according to nonprofit groups.

The Act was approved by the state legislature in June, though Hochul waited until December 26 to give it her signature. The Governor had been urged by state and federal lawmakers to approve the Act, with Congressman Jerry Nadler (NY-12), representing a broad swathe of Manhattan, writing that it was “critical to the efforts to hold the largest oil companies accountable for the damages that they have caused to New Yorkers.”

The fines levied from oil and gas companies will pay for “climate change adaptive infrastructure projects” like restoring coastal wetlands, upgrading storm water drainage systems, and modernizing roads, bridges, and subways. 

New York is the second state to sign a Climate Superfund Act into law, following Vermont, which approved a similar measure in March last year. The state is currently being sued by the US Chamber of Commerce and the American Petroleum Institute, an oil and gas lobby group, over the law — which it claims is “unconstitutional”.

The New York law is likely to face similar legal challenges. “This type of legislation represents nothing more than a punitive new fee on American energy, and we are evaluating our options moving forward,” a spokesperson for the American Petroleum Institute said.

US Financial Watchdogs Make Progress on Climate Risks

Ten US federal financial regulators have made progress addressing climate-related financial risks over the last 18 months, a new scorecard from sustainability nonprofit Ceres shows.

However, while the Federal Reserve, Securities and Exchange Commission (SEC), Treasury Department, and other agencies have made “meaningful strides” when it comes to pumping out research and data on climate risks and factoring these risks into their oversight duties, Ceres says there’s much more to be done.

In particular, agencies have made scant progress embedding climate risk management into binding regulations. For example, while the Fed, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation produced joint guidance for large banks on managing climate risks, these have not been turned into mandatory rules.

Ceres Agency Scorecard

Climate-related efforts by financial regulators may come to a halt under the incoming Trump administration, which is indicating it may scrap a host of environmental rules. For example, it is likely that the SEC’s climate disclosure regulation, years in the making under departing Chair Gary Gensler, will be scrapped once his Republican replacement is installed.

Steven M. Rothstein, Managing Director of the Ceres Accelerator for Sustainable Capital Markets, struck an optimistic note, however, on introducing the scorecard: “We remain hopeful that future administrations will continue to build upon this momentum, implementing forward-thinking policies that safeguard and strengthen the resiliency of our financial system in the face of unprecedented challenges related to a warming planet,” he said.

Australia’s Mandatory Climate Disclosure Regime Begins

Large businesses and financial institutions in Australia have to disclose information on their climate risks and opportunities under new regulation that came into force on January 1.

Covered companies must produce annual sustainability reports which include data on their emissions and how they intend to deal with extreme weather risks and slow-onset climate events. They must also describe how their operations would fare under multiple climate scenarios, including a 1.5°C scenario and greater than 2°C scenario. The sustainability reports have to include information on companies’ governance, strategies, and risk management plans to deal with climate threats, too.

The Australian rules draw on global reporting guidelines drawn up by the International Sustainability Standards Board (ISSB).

This year, the mandatory climate disclosure law covers large firms that meet at least two of the following criteria: have A$500mn (US$312mn) in consolidated revenue, have A$1bn (US$624mn) or more in assets, and/or have 500 or more employees. Smaller companies and nonprofits will be phased into the disclosure regime in subsequent years.

In Brief

The latest Global Water Monitor Summary Report illustrates how climate change is exacerbating water-related disasters, with rising temperatures intensifying monsoons, cyclones, and extreme rainfall events. In 2024, record-breaking global temperatures coincided with a sharp increase in both extreme droughts and high-rainfall events, resulting in over 8,700 deaths, 40 million displaced, and US$550 billion in damages. The outlook for 2025 warns of worsening droughts in South America, southern Africa, and parts of Asia, while wetter areas like the Sahel region in Africa and Europe face heightened flood risks. (Global Water Monitor)

The Federal Emergency Management Agency (FEMA) Administrator has appointed 10 new members and reappointed three to its National Advisory Council (NAC), which provides guidance on disaster preparedness, response, recovery, and mitigation. New Chair Donald Bliss says that this year the Council will focus on enhancing consequence management, improving long-term risk reduction, and addressing technological and security challenges in emergency management. NAC members serve multi-year terms beginning January 1 of this year. (FEMA)

Climate and Weather Intelligence Firm Raises US$6.4mn

AI-powered weather intelligence startup Sunairio raised US$6.4mn in its latest funding round, money which will be used to help the company build advanced climate simulation software for energy traders, utilities, and renewables investors.

The fundraise, first reported by Axios, was led by Buoyant Ventures, together with Constellation Technology Ventures and MassMutual Ventures’ Climate Tech Fund. Sunairio’s edge is in producing probabilistic forecasts of energy demand and supply that incorporate climate and weather change. The forecasts extend from 15 days to up to 15 years and provide insights at the asset level, making them useful to energy market participants looking to understand how climate change and extreme weather could reshape the investment landscape. Its solution utilizes generative AI and advanced statistics to generate high-resolution insights.

Sunairio has leveraged expertise from Northwestern University and the University of Massachusetts to develop its underlying model. Last March, it won a National Science Foundation Grant to build out its tech.

In Brief

The National Oceanic and Atmospheric Administration and the National Science Foundation National Center for Atmospheric Research have renewed and expanded an agreement to share research, tools, and data intended to better prepare the US for extreme weather. The new memorandum of understanding broadens the scope of an earlier 2019 agreement, moving the collaboration beyond weather and climate modeling to include workforce development, community engagement, and advancing technologies that can better understand high-impact weather hazards. (NOAA)

Universities in Kansas, Iowa, Nebraska, and Arkansas are collaborating to develop weather intelligence tools and strengthen climate resilience in agriculture-based communities. Supported by a US$6mn grant from the National Science Foundation, the DARE project (Data-Advanced Research and Education) aims to combine original research, teaching, community engagement, and communication strategies to tackle localized climate impacts and environmental justice issues. Part of the project includes building a “citizen science observation network” to improve real-time weather data gathering. (Kansas State University)

RESEARCH

When risks become reality: extreme weather in 2024 (Climate Central, World Weather Attribution)

Flood underinsurance (Federal Reserve Bank Philadelphia)

Health effects of climate change: An update of the current risks of climate change for health (RIVM)

Adaptation portfolio — a multi-measure framework for future floods and droughts (npj Natural Hazards)

Extreme weather events, climate expectations, and agricultural export dynamics (American Journal of Agricultural Economics)

Thanks for reading!

Louie Woodall
Editor