Physical impacts from climate change such as heat waves, storms, droughts, or sea level rises are already being felt across the globe and will continue to intensify. Financial institutions are exposed to physical climate risks through various transmission channels, which can affect their financial stability.

However, financial institutions have tended to focus their climate-related financial risk disclosures on transition risks such as policy, legal, technology, and market changes, with less granular assessment of the potentially significant and severe direct impacts of climate change. This report assesses the current state of physical climate-related risk disclosures and provides high-level guidance for financial institutions reporting on physical risks in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).

Based on a review of best practices, regulations, standards, data availability, and technical considerations, this resource provides guidance on the disclosure of physical climate risks in line with the TCFD recommendations. It was developed by UNEP FI and the World Resources Institute (WRI) in response to questions raised by 10 institutions convened by UNEP FI at the Climate Adaptation Summit 2021 who committed to publishing climate-related physical risk disclosures in line with the TCFD.

Read more about the Physical Risks & Resilience Statement.