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Climate and environment-related financial risks could significantly and negatively impact the financial sector in future, particularly its financing to those sectors adversely impacted by the climate-related risks, low-carbon policies and the transition from traditional energy sources-based economy to a more sustainable system with alternative energy sources. The participatory countries of the Paris Agreement agreed to align finance flows with a low-emission, low-carbon and climate-resilient growth, in order to facilitate achieving the long-term climate goals. The financial sector, therefore, needs to play a proactive role in aligning financial flows. It is, therefore, of utmost importance to study low-carbon finance and climate-related financial risks. This chapter examine how climate change can affect the financial sector. It discusses the concept, nature, measurement of climate risks and climate-related financial risks and associated prospects and challenges in the assessment and the measurement of these risks. It also presents the green financing initiatives and role of central banks and supervisory authorities and their monetary and financial policies in enhancing green financing and redirecting finance to low-carbon activities. In the financial sector, the insurance industry is highly vulnerable to such risks. The banking sector is yet to witness the serious impact of these risks. With the slowing of global economic growth, appropriate policies are needed to encourage banks to provide increased green finance with an adequate profitability. Studies recommend that climate-related risk has a strong potential impact on banks’ loan default rate as well as on the financial stability, there is hence a need to incorporate climate-related criteria and the systemic risk arising out of climate change into banks’ decision-making process and risk modelling and management. There is a need for developing an appropriate methodology for assessing and reducing these risks. Moreover, observers also anticipate a need for cooperation between banking regulators and banks to develop and adopt best practices in the management of environmental risks. The environment-related risks will call forth a multi-country, or regional, research office to collect and compile the required data and undertake analysis to enhance the banking sectors’ understanding of, and capacity to address, potential systemic environmental risks. What is needed is to test the feasibility of incorporating forward-looking scenarios for assessing potential impacts of providing credit to environmentally unsustainable or sustainable activities on financial stability.

Purpose – This work offers an investigation of the planning and implementation of climate-adaptation and vulnerability-reduction strategies in coastal mega-cities of the Global South, utilizing Kolkata, India, as a case study. This research is designed to identify factors that aid the implementation of climate-centered action in resource-constrained environments of developing countries and provide a set of policy guidelines reflecting best practices.

Methodology/approach – This work draws principally upon analysis of semistructured field interviews conducted in Kolkata, India, during December 2010 and January 2011. The findings are informed by additional data sources as well, including field observations, informal dialogues and meetings, and a review of secondary literature.

Findings – This work identifies several key success factors, including organizational restructuring, resource redistribution, technological innovation, use of external consultants, coupling of climate and development projects, and integration of climate approaches into infrastructure projects.

Research limitations – This research draws upon Kolkata as a case study; thus the work's broader applicability and utility depend on the similarities between the situation in Kolkata and that of other urban areas. As a local study, this work may also offer fewer insights for regional and national policy.

Originality and value – This work fills a timely, unmet need for a greater understanding of climate-adaptation action in the context of cities of the developing world. The extensive use of personal interviews provides unique insights into the minds of planning officials and professionals and draws upon their practical experience to draw lessons for a wide range of similar environments.

This chapter proposes the socioeconomic metabolism (SEM) and multilevel perspective (MLP) as “novel” conceptual and practical models that island policy makers can apply to analyzing the transitioning from the current island tourism to sustainable island tourism. Pandemics, such as COVID-19 and climate-related disasters pose risks that highlight a need for restructuring the dominant “sun, sea, and sand” and mass tourism, with excessive resort buildup on the coasts. These crises and disasters constantly disrupt island tourism, exacerbating the already volatile nature of the tourism industry, especially in the Caribbean. Therefore, the SEM which grounds an understanding of how the island system functions, coupled with the MLP that explains sustainability transitions, are proffered as an alternative and systematic approach to restructuring island tourism. In this regard, the models are analyzed for their application to the tourism accommodation subsector. The chapter concludes with the relevance of the models to policy makers and demonstrates how their application can minimize the risks posed by disasters and pandemics to materials and energy flows in the accommodation sector and eventually lead to sustainable island tourism.

During the period of 2000–2009, a record 402 climate-related disasters occurred in the Southeast Asia region, and the number of geophysical disasters was 61 according to the International Disaster Database by Center for Research on the Epidemiology (CRED). The number of climate-related disasters is much higher than that of geophysical disasters, but due to small or medium scale of the events, attention and assistance to most of them have been limited. Although many people are affected by these disasters every year, in many cases, they do not have sufficient idea and knowledge on preparedness and disaster risk reduction (DRR).

Climate change was identified as an urgent global problem that requires governments to unite their efforts to prepare for potential climate risks at the First World Climate Conference in 1979. This recognition led to the establishment of the Intergovernmental Panel on Climate Change (IPCC) in 1988 to assess the magnitude and timing of changes and estimate their impacts. The IPCC published its First Assessment Report in 1990, which became a basis for negotiations on a climate change convention under the United Nations General Assembly. Between February 1991 and May 1992, the Intergovernmental Negotiating Committee for a Framework Convention on Climate Change met five times under the auspices of the General Assembly, and the Convention text was adopted on May 9, 1992 at the United Nations Conference on Environment and Development, held in Rio de Janeiro, Brazil, where 154 states signed. The Convention entered into force on March 21, 1994. It has near universal membership with 194 Parties (member countries) having ratified (UNFCCC, 2006).