Climate change is increasingly reshaping the financial landscape, particularly in emerging markets. Banks are facing growing exposure to climate-related risks (from floods and storms to extreme heat and wildfires) affecting both their clients and their loan portfolios.
A recent report by Boston Consulting Group highlights how commercial banks in emerging economies can turn this challenge into a strategic opportunity by financing climate adaptation and resilience initiatives.
Climate risk is already affecting banking portfolios
Although banks may not be directly impacted by climate disasters, the financial consequences can be substantial. According to BCG, extreme weather events increasingly affect bank portfolios through several mechanisms:
• Rising loan defaults when borrowers experience climate-related losses
• Declining collateral values for assets located in high-risk areas
• Reduced insurance coverage or higher premiums in vulnerable regions
These factors create growing exposure for banks operating in climate-sensitive sectors such as agriculture, infrastructure, and real estate.
The opportunity: adaptation and resilience financing
Adaptation and resilience (A&R) financing focuses on investments that help communities and businesses prepare for and adapt to climate impacts.
Examples include:
• resilient infrastructure development
• water and flood management systems
• climate-smart agriculture
• climate monitoring and analytics technologies
Despite its importance, adaptation and resilience financing currently represents around 10% of total global climate finance, though it has been growing steadily as climate risks intensify (BCG, 2026).
Banks that develop expertise in this area can gain a competitive advantage while supporting long-term economic resilience.
Strategic actions for banks
According to BCG, financial institutions should focus on several key actions:
- Strengthen climate risk assessment
- Develop climate-focused financial products
- Support high-growth climate solutions
How Climatig supports climate-resilient finance
Understanding climate risk at the asset level is essential for implementing these strategies effectively.
Climatig provides climate intelligence tools that help financial institutions analyze physical climate risks with high spatial resolution and forward-looking climate projections.
By integrating climate science, geospatial analytics, and risk modeling, Climatig enables banks, insurers, and asset managers to:
• assess climate exposure for individual assets or portfolios
• evaluate future climate scenarios and hazards
• support climate-informed lending and investment decisions
• strengthen resilience strategies for clients and portfolios
With reliable climate intelligence, financial institutions can move beyond reactive risk management and instead proactively build climate-resilient financial systems.
Reference
Boston Consulting Group (2026), How Emerging Market Banks Can Finance Adaptation and Resilience,
https://www.bcg.com/publications/2026/how-emerging-market-banks-finance-resilience