This Climate Risk Management Toolkit is for financial institutions (FIs), particularly commercial banks and microfinance institutions (MFIs) in emerging markets, seeking to build and strengthen their response to climate-related risks and opportunities. The toolkit is tailored for organisations at all stages of their climate risk maturity journey, from those beginning to understand climate risk to those embedding advanced, best-practice approaches.
The toolkit offers practical, modular resource for FIs looking to build, assess or enhance their capacity to identify, manage and disclose climate-related financial risks, in line with best practices and international standards.

Structure of each module

The 11 sections are further split into 23 modules. Each module focuses on one key area of climate risk management, such as risk appetite, data collection or scenario analysis. Modules can be explored independently or alongside related topics, with cross-references provided to help you navigate between topics.

Each module aims to give users a clear understanding of why the topic is important, what best practice looks like, and how to start applying it within their own organisations. To do this, modules may include any combination of the following five downloadable resource types:

  • Guidance: short best practice summaries with practical steps
  • Rubric: structured frameworks and illustrative examples
  • Diagram: visual aids such as flowcharts and infographics
  • Tool: adaptable Word/Excel templates for internal use
  • Reference: external resources with links

Target users per module

Stage of climate risk maturity

The toolkit uses a four-stage model to describe how FIs develop their approach to climate risk management.

  • At the Discovery stage, institutions have only a basic awareness of climate risk, with ad hoc or informal actions in place.
  • At the Developing stage, they begin to introduce structured self-assessments and pilot frameworks, assigning initial responsibilities and beginning to develop tools.
  • At the Embedded stage, climate risk management becomes systematic, with formal governance structures, screening tools and reporting processes used consistently across business lines.
  • At the Advanced stage, climate risk is fully integrated into governance, strategy, credit processes and portfolio management, supported by quantitative analysis, continuous learning, and alignment with global best practice and disclosure standards.

Although the toolkit is designed to FIs on different stages of maturity, most of the guidance is designed for FIs at the developing stage. We have also included guidance on what Embedded and Advanced practices look like.

User job profile

Climate risk management is not confined to a single role or department. It involves collaboration across governance, strategy, business lines, risk, sustainability, legal and compliance, and assurance teams (see Module 1).

Each module is designed with one or two key roles in mind, reflecting the broader context of climate risk management within FIs. The toolkit focuses on five target roles:

  • Board-level decision maker or CXO
    Sets the organisation’s overall climate ambition and business strategy. The toolkit offers practical resources for defining strategy, setting risk appetite, allocating resource and ensuring compliance with regulatory standards such as IFRS S2.
  • Front-line Investment/Lending Officer as first line of defence (1LoD)
    Originates transactions and interacts directly with clients. This toolkit helps these users to identify climate risks and opportunities early, apply due diligence and engage productively with clients on transition and adaptation.
  • Risk Manager as second line of defence (2LoD)
    Develops risk management policies and integrates climate risk into credit, market and operational processes. The toolkit includes step-by-step guidance on scenario analysis, stress testing, risk appetite calibration and regulatory reporting.
  • Sustainability/ESG specialist
    Combines technical expertise with strategic influence to advance sustainability objectives. The toolkit provides templates for data collection, client engagement and target-setting to turn high-level commitments into operational processes.
  • Internal Audit as third line of defence (3LoD)
    Offers independent scrutiny of how climate risk is managed and how effective the controls are. The toolkit includes guidance for conducting objective reviews, testing systems and providing assurance across all modules.

The following diagram gives a visual overview of the roles described. Each role is represented by a distinct icon, which appears at the start of each module to indicate which users the material is most relevant to.

CLICK HERE TO VIEW Diagram 1: Typical roles of key users of this toolkit

 

MFI and commercial bank users are encouraged to engage with all modules in this toolkit. While commercial banks often have more formal governance structures and dedicated climate risk teams, MFIs can adapt the guidance to fit their more streamlined or community-focused operations. The materials refer to both institutions collectively as FIs.

Where relevant, the toolkit highlights specific points or adjustments for MFIs or commercial banks to help each identify which sections and tools best suit their needs.

 

Toolkit Guide
Climate policy and governance
Module 2, Module 3, Module 4, Module 5
Risks and opportunities identification
Module 6, Module 7, Module 8, Module 9
Climate risk data collection
Module 10, Module 11
Climate risk assessment and quantification
Module 13
Client climate action operationalisation
Module 14
Ongoing client engagement and advisory
Module 12, Module 16
Client climate performance monitoring
Module 15, Module 17, Module 18, Module 19
Portfolio oversight and monitoring
Module 20, Module 21, Module 22, Module 23
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