Lending for Climate Adaptation
Financial lending activities specifically directed toward projects and assets that substantially contribute to climate change adaptation.
Substantial Contribution to Climate Change Adaptation
The lending activity must finance projects, assets or activities that substantially contribute to climate change adaptation as defined by the EU Taxonomy. The lender must implement a robust assessment framework that evaluates each loan against the Taxonomy adaptation criteria before disbursement.
The financed projects must include a Climate Risk and Vulnerability Assessment conducted in line with Appendix A of the Climate Delegated Act. The CRVA must use climate projections under RCP 4.5 and RCP 8.5 scenarios and identify material physical climate risks over the project's expected lifetime. Adaptation solutions must be identified and implemented that reduce all material risks without adversely affecting the adaptation efforts of others.
The lender must maintain a portfolio-level climate adaptation tracking system that records the share of lending directed to Taxonomy-aligned adaptation activities, the types of adaptation measures financed, and the climate risks addressed. At least 80% of the loan portfolio classified under this activity must be directed to projects meeting the full Taxonomy substantial contribution criteria for climate adaptation. The lender must report annually on portfolio alignment, including the geographic distribution of financed adaptation measures and the physical climate risks they address.