ClimINVEST strengthens the bridge between investors and climate scientists

6 February 2020

Hail showers, far more rain and storms, but also long hot and dry periods. Investors, such as banks and pension funds, must take climate change into account more. ClimINVEST brings climate scientists and investors together in three countries. This is highly informative for both groups.

Flooded street

The Wall is a luxury shopping centre and sound barrier in one, along the A2 motorway in Utrecht. It is modern, beautiful and one of the longest buildings in the Netherlands. But what happens in the case of extreme weather, prolonged heat or drought? Or a breached dyke? Asset managers, banks, real estate agents and insurance companies need to take such factors into account in order to invest wisely.

ClimINVEST is a collaboration between Norwegian, Dutch and French researchers. Adaption economist Karianne de Bruin (Wageningen University and Research) is one of the initiators, together with her former employer CICERO. The climate research centre in Norway is leading the research. ‘We mainly want to increase public knowledge, so that the knowledge of climate scientists finds its way into society. The need for CO2 reduction is known. However, less well known is the financial sector’s need for climate knowledge so that it can implement climate change adaptations where necessary. Then their investments, and with that our pensions, for example, can be climate resilient.’

Zooming in at the city level

Several months ago, De Bruin’s colleague Monserrat Budding-Polo Ballinas joined the ClimINVEST team. She is an urban planner specialised in urban environmental management and climate change. She enthusiastically adds: ‘Previously, the effects of climate change were known at a global level, or at most per country. Regional and local information is still being developed. But now, the Climate Impact Atlas is available, with which you can even look at that at city level!’

The Climate Impact Atlas has been produced by various Dutch knowledge institutions and consultancy firms, including Wageningen University and Research, the Royal Netherlands Meteorological Institute (KNMI) and TNO. Stichting Climate Adaptation Services coordinates and manages the atlas and is involved in ClimINVEST. The atlas gives an impression of the current and (future) threats of floods, water problems, drought and heat per region in the Netherlands, down to municipal level.

They do not speak the same language

With respect to climate knowledge, the Dutch financial sector was somewhat ahead of other countries. De Bruin: ‘Because much of the Netherlands is below sea level, there was always more demand for knowledge. In 2017, De Nederlandsche Bank published the unique report De Nederlandse financiële sector veilig achter dijken? [The Dutch financial sector: safe and sound behind the dykes? – only available in Dutch].’

Yet despite the structured information available in the Netherlands, investors and climate scientists do not speak the same language. Even though they both work with risks and opportunities, investors do not take current and expected climate change sufficiently into account when making financial decisions. And although we are used to thinking about water problems in the Netherlands, we are not in the slightest bit used to thinking about heat stress or drought. ‘In fact, in those areas, the Netherlands is trailing’, say De Bruin and Budding-Polo Ballinas.

Since 2015, French law requires climate risks to be included in investment plans. That forces investors to work on this. In Norway, floods and extreme rain are the biggest concerns for investors. And that applies not just to investments in Norway but also, for example, to investments made in silicon chip factories in Thailand or the Philippines, where a lot of floods occur.

Middle of the bridge

ClimINVEST aims to bring investors and climate scientists together. Investors could register for the research project, says De Bruin. ‘With some parties, we held one-to-one meetings, for example with cooperative pension investor PGGM. Furthermore, last year we organised a gathering with about 40 participants from the Dutch financial sector, including De Nederlandsche Bank.’ During this Science Practice Lab, they obtained insight into the physical climate risk for the financial sector. They learned how their organisations could better deal with climate change and discussed ways to accelerate developments in the area of climate adaptation.

De Bruin: ‘In the Netherlands, the bridge between investors and climate scientists was still quite fragile, but we are strengthening it. We need meet each other on the middle of the bridge and realise a common understanding.’ To this end, the researchers have written a report about the needs of investors and the gaps in their knowledge. De Bruin: ‘For example, we found that investors have a very concrete need for master classes for their employees. They also need climate reports to be translated into practical information that can be directly used in the boardroom.’

Tangible real estate projects

Therefore not only investors but also climate scientists have something to learn. Budding-Polo Ballinas: ‘They need to go further than solely doing research. For example, they should also walk that bridge and try to translate the results in such a way that stakeholders can use the data to take better decisions.’

Wageningen University and Research and Stichting Climate Adaptation Services are already doing this by informing participating companies about relevant climate data and presenting a clear image of that. Researchers are also examining tangible real estate projects, together with real estate investor MVGM, and subsequently producing short fact sheets about these.

The Wall

One of those fact sheets is about shopping centre The Wall in Utrecht. And what did that reveal? Although the shopping centre is built on piles sunk thirty metres deep, the ground around these can still possibly subside in the future due to drought. Infiltration with rainwater can prevent that. At this location, the risk of a breached dyke is low due to existing plans for dyke improvement in the region. The risk of damage due to heat stress is, however, quite high: heat causes the concrete to age faster, and increased use of air-conditioning leads to higher electricity and water consumption as well as higher CO2 emission. Green-roofs on the building and trees planted around it can provide a green infrastructure that mitigates these effects. This is the type of knowledge that investors and real estate agents need.

More information

Researchers from Norway, the Netherlands and France are working together within the ClimINVEST project, which runs from 2017 until later in 2020. The Norwegian climate research Institute CICERO is leading the research; NWO is one of the financiers. The project is part of the European Research Area for Climate Services (ERA4CS).

Did you know?

You can accurately see which climate effects are expected in 2050 for where you live in the Netherlands. The online Climate Impact Atlas and the Klimaatschadeschatter [Climate Damage Estimator – only available in Dutch] show which areas are vulnerable and where adaptive measures can make a positive contribution.

Source: NWO