The paper proposes three principles for climate resilience aligned finance:
- Physical risk management: the physical risks from climate change (such as droughts or heatwaves) should be identified and managed based on forward–looking analysis and considering the intersection of hazard, exposure and vulnerability.
- Do No Significant Harm: the management of risks should be done in a way that does not increase the risk faced by others (for example, by increasing flood risk downstream or damaging biodiversity).
- Alignment with adaptation strategies and objectives: the investment should be consistent with relevant adaptation plans or strategies, such as National Action Plans.
This paper, authored by Michael Mullan (OECD Environment Directorate) and Nicola Ranger (Director, Climate and Environmental Analytics, UK Centre for Greening Finance and Investment) aims to contribute to the process of defining, measuring and – ultimately – increasing the proportion of finance flows that are aligned with climate resilience. It focusses on aligning financial flows with resilience and adaptation goals while noting the unique challenges faced for financing adaptation in least developed countries and Small Island developing states.