Financing climate resilience: Blunomy contributes to a new UNEP FI report on bank adaptation finance
UNEP FI has just published Financing a Resilient Future: How Banks Can Advance Adaptation and Resilience Finance, a new report on how banks can integrate adaptation and resilience into lending, financial products and client relationships. Released today at COP31 in Antalya, it draws on illustrative cases in agriculture and commercial real estate. Blunomy is proud to have contributed to this work as part of the expert review group.
Blunomy is proud to have contributed to Financing a Resilient Future: How Banks Can Advance Adaptation and Resilience Finance, a new report from the UNEP Finance Initiative (UNEP FI), launched today at COP31 in Antalya.
Why this report matters
As climate impacts intensify, banks face growing risks to their clients, portfolios and the wider economy. UNEP’s Limiting Overshoot report (September 2026) finds that global temperature rise is set to cross 1.5°C within the next few years, and that 2024 was already the first calendar year in which average global temperature exceeded that level. Physical hazards affect clients’ revenues, costs and asset values, and in turn their capacity to repay debt and the value of their collateral.
Financing adaptation and resilience also presents opportunities. It can protect asset values, strengthen borrowers’ resilience and open the door to new financial products. The report frames this through two commercial imperatives: value preservation, which protects clients’ repayment capacity and collateral, and value generation, which comes from new resilience-linked revenues and market share.
What the report explores
- How banks can integrate resilience into credit assessments, lending decisions and financial products.
- The potential for resilience-linked financing, blended finance and bonds to support adaptation investments.
- How client engagement and partnerships can strengthen resilience beyond individual assets and businesses.
- Why better data, monitoring and evidence of resilience outcomes are essential to scaling adaptation finance.
Drawing on illustrative cases in agriculture and commercial real estate, the report shows how banks can use existing financial approaches to assess the commercial value of resilience. One example is a three-stage test for resilience-linked lending: a break-even analysis of margin reductions, margin and loan-to-value adjustments tested together, and affordability in a bad year.
Blunomy’s contribution
Blunomy was part of the expert review group that informed the report, alongside banks, development finance institutions and other partners. Our work on climate risk and resilience, and on impact and capital allocation, shaped our input on how resilience can be translated into credit and investment decisions that banks can apply.
We believe adaptation finance scales when analytical frameworks, financial instruments and dialogue between clients, banks and public stakeholders are built together. That is the approach we bring to our work with financial institutions.
→ Read the full report: Financing a Resilient Future: How Banks Can Advance Adaptation and Resilience Finance
Q&A
Q: How can banks move from assessing physical climate risk to financing adaptation?
A: By testing resilience-linked terms within existing credit risk approaches, tagging adaptation lending so it can be tracked, and building the monitoring data that shows whether resilience measures reduce risk over time.
Q: How can banks finance climate adaptation?
Financing adaptation assets and activities is a commercial imperative for banks to generate value and new revenue streams from the fast growing adaptation markets. Some assets can already be financed with traditional banking products (e.g., project finance to fund a new district cooling system). When they are not, a range of financing solutions from loss guarantees to adjusted lending margins and other blended-finance structures could be explored.
Q: How can banks integrate physical climate risk into credit decisions?
A: Banks can test resilience-linked terms with a three-stage approach: a break-even analysis of any margin reduction, margin and loan-to-value adjustments tested together, and affordability in a bad year. Assessing a stressed case alongside the base case gives a more representative view of a resilient borrower. Blunomy works with financial institutions on physical climate risk and resilience assessment in this same logic.
Q: What are resilience bonds and how do they work?
A: Resilience use-of-proceeds bonds are bonds based on a framework that defines eligible resilience assets and activities, such as flood defence infrastructure, water reuse assets, district cooling and smart water meters. They can be aligned with existing ICMA principles and a resilience taxonomy (e.g., Climate Bonds Resilience Taxonomy).Successful issuance depends on a credible structured resilience framework, data showing risk reduction, and an identifiable investor base.
For more on Blunomy’s work on climate risk, resilience and adaptation finance, get in touch with our team.