The European Council approved the conclusions on forging a climate-resilient Europe, thus endorsing a new strategy that outlines long-term vision for the EU become a climate-resilient and to fully adapt to the unavoidable impact of climate change by 2050. The adopted conclusions give political guidance to EC regarding the implementation of the strategy. The Council supports the strategy’s focus on better gathering and sharing data to improve access to, and exchange of, knowledge on climate impact and adaptation, including by enhancing the European Climate Adaptation Platform (Climate-ADAPT).
On February 24, 2021, EC had published a communication on the new EU Strategy on adaptation to climate change. The strategy builds on the 2013 adaptation strategy and is one of the key actions identified in the European Green Deal. In its conclusions, the Council recognizes the use of insurance as a risk transfer mechanism to absorb financial losses related to climate risks as one of the steps toward enhanced risk management and anticipation rather than post-disaster actions. Thus, it invites EC, in consultation with the member states, to look into how climate-related risks on public finances can be measured and managed and to develop a framework that encourages the use of insurance against climate-related risks. The Council highlights the important role of building climate-resilience in the economic recovery from the COVID-19 pandemic. The EU has set a target of at least 30% for climate action, including adaptation, in the Multiannual Financial Framework for 2021-2027, and of at least 37% under the Recovery and Resilience Facility.
As part of this recent development, the European Council notes the relevance of developing further tools to integrate climate scenarios and potential impacts into economic and financial policies to enhance macro-fiscal resilience and ensure that financial and fiscal frameworks are climate-proof and sustainable. The Council invites EC to further elaborate and explore, in consultation with member states, ways to measure and manage the potential impact of climate-related risks on public finances while preventing the duplication of data collection, monitoring, and evaluation requirements and avoiding the creation of additional administrative burden. The Council stresses that the private and public sectors need to work together more closely on financing adaptation while acknowledging the private sector’s critical role in delivering the necessary technology and solutions and mobilizing and leveraging the required capital. In this regard, the Council also recognizes the relevance of the EU taxonomy for the identification and development of sustainable activities for climate adaptation, respecting the "do no significant harm" principle within the meaning of the EU Taxonomy Regulation and avoiding maladaptation. The Council invites EC to provide examples of best practices and solutions in the context of financing of adaptation measures both in the public and private sectors. Moreover, the Council welcomes the entry into force of the Sustainable Finance Disclosure Regulation and the publication of the EC proposal on the revision of the Non-Financial Reporting Directive as well as looks forward to the forthcoming Renewed Sustainable Finance Strategy.
The European Council also welcomes the introduction of the international dimension in the strategy, since the adverse impacts of climate change are having far-reaching effects both within and outside EU. The Council supports the strategy’s aim to step up international action on adaptation, in line with the Paris Agreement. It reconfirms the commitment of the EU and the member states to further scale up mobilization of international climate finance and supports the strengthening of global engagement and exchanges on adaptation. The conclusions also provide guidance for the submission of an EU adaptation communication to the United Nations Framework Convention on Climate Change before COP26, which is the 2021 United Nations Climate Change Conference. With respect to the cross-border activities, the Council recognizes the importance of development and exchange of evidence-based information for assessing and managing climate risks, advancing insurance and other risk finance mechanisms, and enhancing monitoring and evaluation. It stresses the need to exchange knowledge and expertise on innovative solutions as well as to enable the application of local knowledge and increase ownership of adaptation actions among local governments and actors.
Keywords: Europe, EU, Banking, Insurance, Securities, Climate Change Risk, ESG, COP26, Paris Agreement, European Green Deal, Climate Change Scenarios, Sustainable Finance, Taxonomy Regulation, EC, European Council
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