Announced in the EU’s landmark Green Deal, the new strategy outlines a long-term vision for the EU to be fully adapted to the unavoidable impacts of climate change by 2050. The Commission seeks to build whole-economy resilience by improving knowledge, stepping up adaptation planning, accelerating implementation and strengthening climate resilience globally. The need for robust data and risk assessments are central to the Commission’s proposed measures.
Why now?
In an acknowledgement that efforts to date have not worked, the Commission underlines the growing economic cost of increasingly frequent climate-related extreme weather, already averaging over €12bn per year in the EU alone. The environmental and societal repercussions are not quantified.
The publication of the strategy also aims to reinforce the EU’s adaptative capacity in line with the Paris Agreement, the proposed European Climate Law – ahead of the COP26 in Glasgow later this year.
Who is targeted?
The gravity of the challenge makes it a ‘whole-government’ and ‘whole-society’ endeavour. The Commission points out, for instance, the need for citizens and businesses to access better data to climate-inform and future-proof all key decisions to avoid facing increasingly uninsurable damages. Families need more information in buying, building and renovating homes. Banks need data to inform loan agreements. Farmers need access to risk assessment tools to aid crop-planning. SMEs need to understand the vulnerabilities associated with setting up in coastal areas – home to 40% of the EU’s population and its GDP.
What actions are proposed?
The Commission sets out three key objectives, with associated measures –
- Making adaptation smarter – by gathering more and better data on climate-related risks and losses while also making it available to all. To do this, the Commission wants to enhance and expand the existing European platform for adaptation knowledge, Climate-ADAPT.
- Making adaptation more systemic – the Commission is pushing for the incorporation of climate resilience considerations in all relevant policy fields. All actors – private and public – are called on to improve their adaptation planning while considering nature-based solutions for adaptation.
- Speeding up adaptation – the development and rollout of adaptation solutions needs to be accelerated, alongside measures to close the climate protection gap and steps to ensure the availability and sustainability of fresh water.
Do fiscal frameworks need to change?
Today, national fiscal frameworks only include limited climate change risks. The Commission calls for this to change and proposes the development of new ways to measure the potential impact of climate-related risks on public finances alongside new tools and models for climate stress testing.
Budgetary planning will also need adapting. The Commission also proposes to start exploring with member states how to better take account of climate change in national reporting and fiscal frameworks.
Why the focus on insurers?
The Commission is clearly looking to the insurance industry to spread risks and costs. Particular attention is paid to the need to close the climate-protection gap, the share of non-insured economic losses caused by climate-related disasters. With a view also to the Commission’s Renewed Sustainable Finance Strategy, due out before the summer, the new strategy holds back from proposing regulatory action, focusing instead on softer measures. These include ways to better understand natural disaster insurance penetration in member states, promote best practices in financial instruments for risk management and explore the wider use of financial instruments to deal with climate-related risks.
What about international action?
Building on the EU’s existing commitments under the Paris Agreement, the new strategy sets out three actions to integrate international action –
- Increasing support for international climate resilience and preparedness, including steps to promote sub-national, national and regional approaches to adaptation, particularly in Africa and Small Island Development States.
- Scaling up international finance to build climate resilience, closing the existing ‘gap’ through EU instruments for external action as well as by leveraging private sector investments. New instruments are also being considered, such as the European Fund for Sustainable Development Plus.
- Strengthening global engagement and exchanges to learn from others’ experiences and share information, including from the EU’s COPERNICUS programme.
Further resources:
- The EU Strategy on Adaptation to Climate Change
- Are you professionally ready to mitigate the risk and maximise the opportunity of climate change? Find resources, information and inspiration on the ICAEW Climate Hub