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Asia Investor Groupon Climate Change (AIGCC)
Investor Expectations ofNational Adaptation Plans in Asia
November 2022

info@aigcc.net
www.aigcc.net

INTRODUCTION
The Asia Investor Group on Climate Change (AIGCC) is an initiative to create awareness andencourage action among Asia’s asset owners and financial institutions about the risks andopportunities associated with climate change and low carbon investing. AIGCC members
come from 11 different markets in Asia and include asset owners and managers with acombined AUM of over US$35 trillion.
AIGCC investor members are committed to working closely with governments scaling
ambition on Nationally Determined Contributions (NDCs) and achieving set targets. The
National Adaptation Plan (NAP) process, which is a requirement under the UNFCCC,complements and reinforces countries’ adaptation strategies by providing a concretemeans for successful achievement of these initiatives.

KEY ASKS
The members of AIGCC’s Physical Risks Working Group have put together the following listof key asks from governments on the various elements of the National Adaptation Planprocess:1. Outline a consistent, national view of physical climate risk
Regularly undertake and communicate physical risk assessments of assets,
particularly critical infrastructure, and risk mitigation measures to be taken.
Sufficient information should be presented in a way that allow stakeholders(including investors) to assess material risks and/or opportunities that affect them,or inspire confidence that the risks have been, or will be mitigated.
2. Base national adaptation plans on scenario analysis
To ensure adequate consideration of risks in a range of potential climate futures, werecommend the use of multiple climate scenarios including a worst-case high future
emissions scenario that references IPCC. Government can play a crucial role insupporting the development of science to produce the data used for physical risk
assessments.
3. Identify and prioritise vulnerable systems, groups and communities in NAPs in
adaptation planning and implementation.
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4. Ensure corporate disclosure on physical risks
Ensure enforcement of corporate disclosure requirements to present investors withdecision-useful information regarding physical risk assessments and risk
management efforts. We recognise that required data and analysis may not bereadily available and companies would need time to achieve full disclosures overtime.
5. Consult with members of the finance sector as part of the NAP process
As part of the NAP process, a role should be created for a representative to serve asa point of contact that can coordinate with and keep financial institutions informedof the discussions and developments in the NAP process.
6. Include inter-regional effects in developing NAPs
There is increased recognition of transmission of climate impacts across regions.
Alignment of public and private strategies to identify cross-border climate impacts
and collaborate on adaptation planning would be crucial to addressing these interregional climate risks.
7. Include action-oriented points on implementation and financing strategies inNAPs
Identify pipeline projects that are fundable and implementable, finance gaps andfinancing options, and assign implementation responsibilities, timelines, andevaluation criteria.
a. The role of public funding to de-risk, reassure and attract private investments
in adaptation projects is critical. Creating a platform with a pipeline of readyto-be-funded adaptation projects that has assurance of public funding
support would enable easy flow of private finance into these projects.
b. Transparent and open processes are necessary to ensure effective
stakeholder participation, dispute resolution and effective implementationof NAPs.

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Investor Expectations ofNational Adaptation Plans in Asia –Further Detail4KEY ASKS
The members of AIGCC’s physical risks WG have put together the following list of key asks
from governments on the various elements of the National Adaptation Plan (NAP) process:1. Outline a consistent, national view of physical climate risk
Regularly undertake and communicate physical risk assessments of assets,
particularly critical infrastructure, and provide periodic, accurate, comprehensive,
timely and commercially available records in relation thereto. Publicly accessible
datasets and assessments would ensure higher private sector participation in theadaptation planning process and the private sector can work together withgovernments on consolidating data sources that are used in the assessment
process. This assessment should intend to set standards for physical risk
assessments that:a. Align with international best practiceb. Can be adopted by state/local governments and other actors (e.g., investors)
to ensure a nationally consistent view of physical risk.
Where information may be too sensitive to be shared publicly, governments canshare information that inspire confidence on risk mitigation.
2. Base national adaptation plans on scenario analysis
Governments should consider funding adequate science to produce the data used
for physical risk assessments reliably and also conduct scenario analysis to support
climate-proofing strategies across NAPs. For longer-term analysis, for which thetimeframe should be disclosed, at least two climate scenarios should be used toensure risks have been considered in a range of potential climate futures.
Governments can partner with or engage the private sector to build capacity todownscale the outputs of climate models to resolutions that are able to quantify
climate risk vulnerability and exposure.
3. Identify and prioritise vulnerable systems, groups, and communities in NAPs
While adaptation assessments focus on vulnerable systems exposed to climate
hazards, it is important to also ensure that the approaches applied provide
information on the identification of particular vulnerable groups and communities for
affected regions and prioritise them in adaptation planning and implementation.
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4. Ensure corporate disclosure on physical risks
Investors need to conduct their own physical risk analyses which is dependent on
climate disclosure data from companies. To enable that, enforce disclosure
requirements and ensure that disclosure frameworks present investors withdecision-useful information. This should be introduced in a phased approach.
Enhanced disclosure of the location of physical assets associated with company
operations would be a crucial step to better integrate climate considerations into
investment decision-making processes. Disclosures and metrics that coversystemic resilience and availability of production weighted data would be important
to determine adaptive capacity. Engagement with data analytics providers will also
be essential to ensure increased accessibility, consistency, and transparency ofdata products.
Details of tools and service providers used by Asian investors to assess physical risks
have been compiled into an AIGCC report available here.
5. Consult with members of the finance sector as part of the NAP process
As part of the NAP process, a role must be created for a member to serve as a pointof contact that can coordinate with and keep the finance sector informed of thediscussions and developments in the NAP process. Consultation with members of
the finance sector on the management of stranded assets must be central to thedevelopment of NAPs.
6. Include inter-regional effects in developing NAPs
NAPs typically identify climate impacts within defined administrative boundaries,
failing to take into account interregional climate risks. Interregional risks from climatechange include factors such as transboundary water use, supply chains, concurrent
impacts, etc. risks related to water, migration. As such, regional and international
coordination of NAPs is important to integrate interregional aspects into climatechange risk assessments and adaptation plans and to ensure that resources areoriented towards reducing inter-regional risks and building systemic resilience toclimate change globally.
Leveraging Asian inter-governmental platforms such as ASEAN to create interregional climate risks model can help countries develop more effective NAPs.

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7. Include implementation programs and financing strategies in NAPs
Following up on NAPs, governments should put in place adaptation implementation
programs to encourage adaptation initiatives. To enable more investors toparticipate from a financing perspective:a. Clearly layout the NAP process from a financing perspective from thedevelopment phase to the implementation phase. Financing strategy foradaptation plans should:
i. identify where the finance gaps areii. determine financing options
iii. identify operational next steps
iv. recognise and develop investment strategies across different asset
classesb. Clear articulation of the role of, and engagement strategies for, institutional
investors across the various stages of the NAP process including planning,
implementation, reporting, monitoring and evaluationc. The role of public funding to de-risk, reassure and attract private investments
in adaptation projects is critical. A standing advisory group with relevant
government representatives, MDBs, philanthropic funders and the private
sector should be established, with a core mandate to develop and drive a
range of financial products, mandates and co-investment opportunities toco-fund resilience and adaptation investment. The development of aplatform which provides essential details of pipeline of ready-to-be-funded
adaptation projects in each country would be an essential tool that thisadvisory group can use to structure discussions.
d. Adaptation assessment and implementation measures may have social,political and economic implications, potentially becoming a cause forconflict. Transparent and open processes are necessary to ensure effective
stakeholder participation, dispute resolution and effective implementationof NAPs.

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About AIGCC

8ABOUT AIGCC
The Asia Investor Group on Climate Change (AIGCC) is an initiative to create awareness andencourage action among Asia’s asset owners and financial institutions about the risks andopportunities associated with climate change and low carbon investing. AIGCC provides
capacity and a trusted forum for investors active in Asia to share best practice and tocollaborate on investment activity, credit analysis, risk management, engagement andpolicy related to climate change.
With a strong international profile, the AIGCC network also engages with government
pension and sovereign wealth funds, family offices, and endowments, AIGCC represents
the Asian investor perspective in the evolving global discussions on climate change and thetransition to a net zero emissions economy.

ABOUT THE PHYSICAL CLIMATE RISKS AND RESILIENCE WORKINGGROUPAIGCC facilitates a Physical Climate Risks and Resilience Working Group which is memberonly and is chaired by an AIGCC investor member. The physical climate risk and resilience
working group is intended to focus on the development of solutions to enable investors tointegrate physical risk and resilience considerations into portfolio management and drive
more investment into adaptation solutions. A notable piece of publication developed andreviewed by AIGCC and this WG is a guidance report that puts together a compendium oftools and service providers for investors in Asia to integrate physical climate risks into
investment analysis and stakeholder engagement.
AIGCC investor members are committed to working closely with governments scaling
ambition on Nationally Determined Contributions (NDCs) and achieving set targets. With
many countries already experiencing the physical impacts of climate change, adaptation
goals, objectives and priorities have been included in their NDCs as well. The NationalAdaptation Plan (NAP) process initiated by several countries complements and reinforces
countries’ adaptation strategies by providing a concrete means for successfulachievement of these initiatives.

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