A new report from Oxford University’s Environmental Change Institute, Smith School of Enterprise and the Environment and the Green Finance Institute highlights significant gaps in UK policy that are slowing the flow of finance towards managing impacts extreme heat, floods, storms and drought in the UK.
It includes 25 recommendations from adaptation experts to government to address vulnerabilities and boost resilience to climate impacts.
This summer, the government is due to publish its next five-year plan for managing climate impacts.
Last summer, more than 3,000 excess deaths were recorded during the unprecedented heatwave. Such excess deaths are predicted to rise to over 7000 per year by 2050.
In 2021, London’s vulnerability to flash flooding was exposed, impacting homes and critical services such as hospitals, schools and Underground stations.
In light of this, a robust plan must mobilise the necessary investment to enable the UK to adapt to these climate impacts and protect people, property and prosperity across the country.
‘The UK is underprepared for climate change, putting lives, livelihoods, assets and well-being at increasing risk. Physical climate risks are not fully accounted for in financial decision making which means investment flows into critical sectors like infrastructure, buildings and agriculture may be unknowingly pushing the UK in the wrong direction, as well as leaving the UK financial sector itself exposed to systemic financial risks.
‘These gaps require action by financial institutions but also regulators and government. Government action is not matching the urgency and risk.’
DR NICOLA RANGER
Lead author and leader of the Resilience and International Development Programme at Oxford University
The research shows current investment flows into sectors including infrastructure, buildings and agriculture could be making the UK more vulnerable to climate impacts.
For example, according to the Task Force on Climate-Related Financial Disclosures, only around 20% of asset managers and 35% of asset owners are reporting on their physical climate risks.
‘Following the Climate Change Act, the UK was seen as a global leader on adaptation, but despite having a world-leading insurance market, leading scientific institutions, a thriving tech sector, international banking and more, that leadership is at risk.
‘The UK financial sector should be a global leader in same way as it has been on net zero. The failure to grasp that opportunity should be added to the list of climate risks facing the UK, and this report shows how to fix it.’
EMMA HOWARD BOYD CBE
Co-author and chair of the Green Finance Institute
In the report, Mission Climate Ready: Unleashing finance and investment for a prosperous Climate Ready economy, the authors make 25 recommendations for change.
These include the UK government issuing the first dedicated adaptation bond to support local, municipal and national adaptation projects; establishing a National Office for Climate Readiness and creating public-private taskforce by the end of 2023 to define adaptation roadmaps for sectors and clear investment plans aligned with national goals.
To enable timely action, the government should respond with clear commitments to adaptation finance by 2025.
The report brings together experts from the University of Oxford and the Green Finance Institute with those from civil society organisations and the private sector.
The Infrastructure and Projects Authority (IPA) estimates that total infrastructure investment in the UK over the next 10 years, including private investment, will be nearly £650 billion.
That is 35 times larger than the costs of adaptation estimated for climate-proofing infrastructure from the UK’s 3rd National Climate Risk Assessment, published last year.
This demonstrates the potential scale of the financial firepower to be unleashed, but also the urgent need to integrate climate resilience within financial flows in the UK.