CLIMATE CHANGE GLOSSARY
In human systems, adaptation is the process of adjustment to actual or expected climate and its effects in order to moderate harm or take advantage of beneficial opportunities. In natural systems, adaptation is the process of adjustment to actual climate and its effects; human intervention may facilitate this.
Adaptation solutions are driven by local context, especially in emerging markets. They are wide-ranging across physical risks and impacts and across multiple sectors and already offered by many large, publicly traded companies. Demand for specific solutions will evolve over time, so investors are encouraged to develop a mindset for understanding climate impacts today and in the future, and identifying adaptation needs and opportunities. Identifying opportunities by sector requires understanding the range of impacts, and solutions existing or in development.
An adaptations solutions company has a significant business line in a technology, product or service that prevents or reduces the impacts before, during or after a climate hazard. The relative significance of a company’s adaptation solutions business may vary depending on its stage of growth, business model and context of operation.
The ability of people, institutions, systems, and other organisms to adjust to potential damage, to take advantage of opportunities, or to respond to consequences.
Climate change refers to significant and lasting changes in the Earth’s climate patterns, particularly an increase in global temperatures. This phenomenon is largely driven by human activities, such as burning fossil fuels, deforestation, and industrial processes, which increase the concentration of greenhouse gases in the atmosphere. These changes can lead to severe weather events, rising sea levels, and shifts in ecosystems and wildlife.
Climate change resilience is the ability of a system to withstand climate-related shocks or stressors. It is the capacity of a system to cope with, or recover from, those effects, while retaining its essential original components. The IPCC (Intergovernmental Panel on Climate Change) defines resilience as the capacity of interconnected social, economic and ecological systems to cope with a hazardous event, trend or disturbance, responding or reorganizing in ways that maintain their essential function, identity and structure. Resilience is a positive attribute when it maintains capacity for adaptation, learning and/or transformation.
Climate adaptation is the process of adjusting systems, practices, and policies to minimize the risks and damages associated with climate change. It involves making communities, ecosystems, and economies more resilient to the impacts of rising temperatures, extreme weather, changing precipitation patterns, and sea-level rise. Unlike mitigation, which focuses on reducing greenhouse gas emissions, adaptation addresses the effects already occurring or anticipated. Examples include constructing flood defenses, altering agricultural practices to handle drought, designing urban infrastructure for heat resilience, and improving disaster preparedness.
The Climate Bonds Taxonomy is a tool that helps identify projects and assets that can help achieve a low-carbon economy. It’s a resource for investors, governments, municipalities, and issuers to understand which investments can help achieve this goal. The Taxonomy is based on the latest climate science and research from organizations such as the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC).
Climate modeling uses computer programs to calculate the interactions between the ocean, atmosphere and land using factors such as water vapor, carbon dioxide, heat, and the Earth’s rotation as inputs. Climate models project climate (the average weather over a long period of time, e.g., a 30-year period), not weather (what an area experiences on an hourly or daily basis).
Climate risks and impacts drive the need for adaptation solutions. They and their associated impacts are projected to increase with every degree of global warming if not managed. Climate-risk drivers include flooding, droughts, extreme heat, hurricanes/storms, sea level-rise, and other environmental hazards.
The ability of people, institutions, organizations and systems, using available skills, values, beliefs, resources and opportunities, to address, manage and overcome adverse conditions in the short to medium term.
The Climate Resilience Investment in Solutions Principles (CRISP) Framework is a framework for bond issuers, investors and other stakeholders seeking guidance on the different ranges and types of climate resilience investments, how to define and assess physical climate risks, and how to credibly demonstrate climate resilient outcomes.
Decarbonization is the process of reducing or eliminating carbon dioxide (CO2) emissions, particularly those from human activities such as the burning of fossil fuels (coal, oil, and natural gas) for energy. Decarbonization involves transitioning to low-carbon or carbon-free sources of energy, like wind, solar, and nuclear power, to minimize the carbon footprint. Decarbonization efforts are an important component of global strategies to combat climate change by limiting the amount of greenhouse gases released into the atmosphere.
Environmental justice refers to ensuring that vulnerable and historically marginalized communities, often disproportionately affected by environmental hazards and climate change, have equitable access to clean air, water, and safe living conditions. It emphasizes fair treatment and meaningful involvement of all people, regardless of race, income, or ethnicity, in climate-related decision-making processes. It seeks to address the unequal burden of climate impacts on low-income and minority populations, who are often more exposed to pollution, extreme weather events, and other environmental risks, and advocates for policies that promote both climate resilience and decarbonization.
The presence of people; livelihoods; species or ecosystems; environmental functions, services and resources; infrastructure; or economic, social or cultural assets in places and settings that could be adversely affected.
The GICS Global Industrial Classification Standard (GICS) is a system that classifies companies by sector, industry group, industry, and sub-industry. Investors and analysts use the GICS to compare and contrast companies with their competitors. GICS has 11 sectors: Communication Services, Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care, Industrials, Information Technology, Materials, Real Estate, and Utilities.
The potential occurrence of a natural event or trend that may cause loss of life, injury, or other health impacts, as well as damage and loss to property, infrastructure, livelihoods, service provision, ecosystems and environmental resources.
The Intergovernmental Panel on Climate Change (IPCC) is the United Nations body for assessing the science related to climate change. The IPCC prepares comprehensive Assessment Reports about the state of scientific, technical and socio-economic knowledge on climate change, its impacts and future risks, and options for reducing the rate at which climate change is taking place.
The consequences of realized risks on natural and human systems, where risks result from the interactions of climate-related hazards, exposure, and vulnerability. Impacts generally refer to effects on lives, livelihoods, health and well-being, ecosystems and species, economic, social and cultural assets, services (including ecosystem services), and infrastructure.
Maladaptive actions i.e., actions that may lead to increased risk of adverse climate-related outcomes, including via increased greenhouse gas (GHG) emissions, increased vulnerability to climate change, or diminished welfare, now or in the future.
A “nature-based solution,” leverages natural systems and ecosystems to address challenges posed by climate change. These solutions focus on enhancing and restoring natural environments to absorb carbon, mitigate climate impacts, and improve biodiversity while benefiting human communities. For example, reforestation projects can help sequester carbon, while restored wetlands can reduce the risk of flooding. Similarly, urban green spaces like parks or green roofs can lower temperatures and capture carbon in cities. Nature-based solutions offer sustainable, cost-effective alternatives to engineered solutions by working with natural processes to achieve both resilience and decarbonization goals.
Economic costs and financial losses that may arise from the increasing severity and frequency of extreme climate change-related weather events such as heatwaves, landslides, floods, wildfires and storms (so-called acute physical risks); or longer-term gradual shifts of the climate such as changes in precipitation and rising sea levels and average temperatures (so-called chronic physical risks or chronic risks).
The potential for adverse consequences for human or ecological systems. In the context of climate change impacts, risk results from the dynamic interactions between climate-related hazards with the exposure and vulnerability of the affected human or ecological system. In the context of climate change responses, risks result from the potential for such responses not achieving the intended objective(s), or from potential trade-offs or negative side-effects on, other societal objectives, such as the SDGs (Sustainable Development Goals).
The propensity or predisposition to be adversely affected. Vulnerability encompasses a variety of concepts and elements, including sensitivity or susceptibility to harm and lack of capacity to cope and adapt. Vulnerability is widely understood to differ within communities and across societies, regions and countries, also changing over time.