Policy Note on Integrating Risk Finance in National Adaptation Planning launched

Policy Note on Integrating Risk Finance in National Adaptation Planning launched 

Enhancing risk-informed decision-making and investments

Climate resilience building and emissions reductions are critical to avoid the worst-case scenarios projected by the Intergovernmental Panel on Climate Change (IPCC). National adaptation planning and corresponding investments are vital to make societies resilient to the impacts of climate change.  

In order to examine how risk-financing considerations can enhance national adaptation and investment processes in vulnerable countries, a Policy Note was developed by the CVF-V20* Secretariat, the InsuResilience Secretariat, the Munich Climate Insurance Initiative (MCII), the NDC Partnership Support Unit and the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat. 

The Policy Note provides decisionmakers with a detailed account of how integrating risk-financing considerations in adaptation planning can enhance investment decisionin the context of climate change. It makes references to three instruments under the UNFCCC: Nationally Determined Contributions (NDCs), National Adaptation Plans (NAPs) and adaptation communications (adcoms). 

Currently, the risks, the associated financial losses, the measures for addressing these losses and the cost-effectiveness of such measures are mostly unknown to vulnerable countries and development partners.  

To address these challenges, the Policy Note suggests concrete Action Areas for the InsuResilience Global Partnership to take forward in cooperation with other partners and initiatives. These Action Areas were endorsed by the InsuResilience Global Partnership’s High-Level Consultative Group on 15 September 2020: 

  1. Raise awareness and support advocacy for the benefits of integrating risk-finance instruments and strategies into national resilience and adaptation effortsexpand the information on these benefits and corresponding opportunities for vulnerable countries, highlighting the importance of raising international support for developing countries to implement adaptation and risk reduction measures .
  2. Enhance capacity building across in-country institutions: work with other initiatives to scale up capacity-building efforts that support countries in integrating risk-finance considerations early on in adaptation planning and strategies. 
  3. Strengthen availability and access to data, information and knowledge to model resilience baselines, deal with uncertainty and set investment targets based on outcomes: strengthen efforts to develop and make accessible recognized and robust methodologies and tools for vulnerable countries to establish a resilience baseline against which to set investment targets and plan adaptation, risk reduction and risk-financing measures cost-effectively. 
  4. Promote country-driven access to private sector expertise and capital: explore and concretize avenues through which countries can systematically and freely access and independently utilize the expertise of the risk industry early on in planning and pricing adaptation .
  5. Disseminate good practicesidentify and disseminate good practices for countries with a focus on South-South exchange of expertise and innovative solutions in finance, technology and policy .

Download our policy note here

* The Vulnerable Group of Twenty (V20) Ministers of Finance from 48 countries of the Climate Vulnerable Forum (CVF) is a dedicated dialogue and action platform that works on financial responses to maintain and strengthen fiscal stability and economic resilience in the face of climate change. This includes addressing investments to enable climate-proof growth, reduce exposure to transition and climate risk, carbon pricing, and tackling increasing cost of investment capital due to climate vulnerability.