Sources: Barclays, AXA (portfolio catastrophe loss modelling), AXA (natural hazards risk consulting), Swiss Re, World Economic Forum, Standard Chartered Bank.1 Barclays Barclays integrated climate risk into the company’s broader Enterprise Risk Management Framework, aligning with other Principal Risks and ensuring a holistic approach to risk identification, assessment and management. Barclays’ Climate Risk Framework facilitates a structured integration of climate risk considerations into the bank’s operations. It undergoes regular reviews and updates – including changes to risk taxonomy, definitions and methodology – to align with changing regulatory expectations and external developments. 3 SwissRe Swiss Re developed a parametric insurance solution to help protect the coral reef off the coast of Mexico’s Yucatan Peninsula. In partnership with The Nature Conservancy and regional governments of Mexico, the insurer designed a solution that would issue payouts to a trust consisting of public and private actors that maintain reefs. To ensure the rapid disbursement of funds, payouts are triggered by wind speed measurements rather than the assessment of damage following an incident.2 AXA AXA employs and adjusts sophisticated Nat Cat models that combines exposure, hazard and vulnerability to assess climate- related natural disaster risks. Nat Cat models integrate these three crucial components of the P&C insurance risk equation, when evaluating potential portfolio impacts over various time horizons, climate pathways and resolutions. 4 Standard Chartered Bank Standard Chartered Bank believes immediate action on adaptation is essential, with at least $317 billion of investment required between now and 2040. A recent report by the bank shows that every $1 spent on adaptation in low-income markets could generate $12 of economic benefit. The bank’s Guide for Adaptation and Resilience Finance defines key terms and lists over 100 investable activities, including climate-resilient crops, public hospital infrastructure and mangrove conservation.Sponsor and support the alignment of commercial and scientific climate models to better assess climate risk in financial valuations – current models are inadequate –Invest further to improve the integration of evolving climate science into asset, debt and equity valuation processes. –Align commercial practices with evolving climate models and local expertise, to enable better interpretation of risk premiums and discounting factors, allowing for more accurate pricing of climate risks and enhancing decision-making across portfolios. –Use the outputs of these models to identify hotspots for adaptation and resilience finance, allowing capital to be provided in a way that reduces climate risks. –Ensure appropriate controls are in place to mitigate environmental and social risks and avoid any unintended consequences of maladaptation.Build portfolio strategies to capitalize on risk-mitigating investments in addition to the energy transition –Seize clear opportunities to invest in the infrastructure required for the clean energy transition. –Investing in climate resilience and adaptation across related or regionally located assets – which currently receives a fraction of global sustainable financing – could enhance short- and medium-term portfolio returns. Innovate with the public sector to develop financial solutions that protect natural assets and safeguard vulnerable communities –Work closely with governments and local stakeholders to create financial products, such as parametric insurance, and strategies that safeguard ecosystems and the populations that depend on them. –Develop green bonds, sustainable insurance solutions and financing mechanisms that incentivize nature-based solutions and climate adaptation efforts, ultimately reducing systemic social and financial risk tied to environmental degradation. Adaptation case studies in the financial services system FIGURE 22 Business on the Edge: Building Industry Resilience to Climate Hazards 44

Business on the Edge 2024