New Climate Tool for Financial Institutions
PROADAPT will finance the development of an innovative tool for assessing climate risk.
Bank of Brazil (Banco do Brasil) and the Inter-American Development Bank (IDB) has signed an agreement to fund a new study on Climate Risk, with the objective of investigating potential losses for the agricultural credit portfolio arising from current and future climate change, such as droughts and floods. The study will be funded through PROADAPT, a 5-year project facility co-financed by IDB and NDF.
The general objective of PROADAPT is to increase the climate resilience of micro, small and medium-sized (MSME) companies and the local communities in which they operate. One of the main components is knowledge management and dissemination in all of Latin America.
The new study will include the development of an analysis tool which will make it possible for financial institutions to include climate risk analysis in their credit policies.
Hugo Flórez Timorán, IDB's representative in Brazil, states the tool "will allow financial institutions to correctly assess the climate risk of their portfolios, opening space for the development and valuation of climate-smart technologies and practices that are capable of mitigate them. This study will contribute to the promotion of climate-resilient investments in the agricultural sector of Brazil and Latin America and the Caribbean.”
