Catalyze investment in resilience

Financing prevention and de-risking investment

The Sendai Framework for Disaster Risk Reduction identifies investing in disaster risk reduction as one of its four priority actions. In response, UNDRR has intensified its work in this area. Our goal is to support countries in accessing more financing for prevention, while at the same time, helping the public and private sectors to de-risk investments and reorient financial flows for increased resilience. This translates into UNDRR focusing on the following areas:

Identifying gaps in public spending by tracking/tagging DRR-related expenditures and conducting risk-sensitive budget reviews;
Increasing transparency and data on private sector DRR actions and strategies and enabling investors to incorporate such information in their decision-making process;
Developing new and innovative financing models for DRR investment, such as blended finance instruments and prevention/resilience bonds;
Ensuring financial institutions and banks align their strategies, operations and activities with the Sendai framework, including by revising credit assessment practices; and
Leveraging the full potential of the insurance sector, not only for disaster risk protection but also for encouraging risk prevention

National financial frameworks

Budget Tagging and Tracking

UNDRR has developed a methodology for tagging and tracking Disaster Risk Reduction (DRR) and Climate Change Adaptation (CCA) expenditures in public budgets. This system allows the institutionalizing of CCA and DRR in government processes and helps governments uncover funding gaps, improve spending effectiveness, and facilitate decision-making.

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Related reading:

Tracking the money for climate adaptation and disaster risk reduction issue paper provides an overview of the latest international and country trends in this area. Read more

UNDRR conducted risk sensitive budget reviews (RSBRs) for 16 African countries and published a report on Disaster Risk Reduction Investments in Africa. Read more

INFFs for Disaster Risk Reduction

UNDRR in collaboration with UNDESA developed this note to support governments on how to use integrated national financing framework (INFF) in achieving their disaster risk reduction (DRR) objectives. Integrated national financing frameworks (INFFs) can help countries finance their national sustainable development objectives and the Sustainable Development Goals (SDGs) through a strategy to mobilize and align financing with all dimensions of sustainability, broaden participation in the design, delivery and monitoring of financing policies, and manage risk.

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Financial markets

Guide for Adaptation and Resilience Finance

UNDRR in collaboration with Standard Chartered Bank and KPMG International have developed a Guide for Adaptation and Resilience Finance that sets out what constitutes as adaptation and resilience finance. IT includes a practical roadmap for financing and over 100 investable activities, including climate-resilient crops, public hospital infrastructure investment, and mangrove conservation and replanting. This Guide seeks to provide confidence to investors looking to allocate capital to adaptation projects, as well as to companies looking to raise capital for adaptation and resilience products, solutions, or other investment opportunities.

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Resilience Classification Framework

UNDRR, together with the Climate Bonds Initiative, has produced a blueprint for the development of a climate resilience classification framework, with the primary objective of promoting and facilitating the much-needed investment in climate resilience through capital markets. Urgent mechanisms need to be built to bridge the gap between high-level objectives and the practical realities of directing capital flow to investments that will make economies and societies more climate resilient. This Framework will help address this issue by providing an evidence-based approach that enables issuers, investors, and other stakeholders to identify climate resilience investments, assets and entities and facilitate the flow of capital toward them.

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Disaster Events and Financial Lending Streams

UNDRR along with the Economist Intelligence Unit prepared a study to address financial stability in lending streams which includes an event analysis and recommendations for change. This report highlights the urgent need to rewire the current financial systems towards (a) de-risking current investments (b) integrating risk reduction into credit allocation and (c) redirecting financial flows towards risk reduction. The study assessed the economic impacts of disasters and how it cascades through the financial system, through case studies, covering both sectoral and country examples.

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Anticipatory finance: An introductory guide

The guide aims to help the reader understand what Anticipatory Action (AA) is and what benefits it offers; explain the different potential sources of AA finance available in a country; present real-world examples; and identify risks and challenges.

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Engagement with the private sector

Investing in disaster risk reduction is a precondition for developing sustainably in a rapidly changing climate. The private sector has a crucial role to play in financing and directing investment towards projects and companies that properly manage risks and avoid the creation of new risks for society. UNDRR is engaging with the private sector on a number of initiatives to catalyse investments in resilience including ARISE, a Network of Chief Resilience Officers and an Investor Advisory Board.