Europe's summer of heat and drought in 2026 caused an estimated 180 billion euros in economic losses across the EU, equivalent to around 1% of its GDP. Against this backdrop, climate risks are becoming an ever more important concern for banks and insurers.
Climate risks are increasingly affecting balance sheets, prompting banks and insurers to potentially tighten their lending and insurance conditions. Companies are therefore looking for ways to strengthen their resilience, limit the impact of climate change on their operations, and reduce the environmental impact of their own activities.
In this article, Planet2050 reflects on the 10th Sustainable Finance Gipfel, held at the Frankfurt School of Finance & Management on October 1 and 2, 2026.
Key takeaways
Europe's summer of heat and drought in 2026 could reduce EU GDP by an estimated 1%, equivalent to around 180 billion euros.
As climate risks increase, banks and insurers may impose stricter lending and insurance conditions.
Companies need resilience and reliable, verified data to maintain access to financing.
Verified, high-quality Carbon Removal projects are likely to become increasingly important through 2050.
ABOUT THE EVENT:
Organised by the Sustainable Finance Cluster under the theme "Sustainable Finance: Bridging the Financial and Real Economy", the event attracted nearly 1,000 registrants.
Key topics included financing the economic transition, physical climate risks and resilience, nature finance, Carbon Markets, Environmental, Social, Governance (ESG) data, and the use of artificial intelligence.
Speakers and participants represented a wide range of organisations and companies, including Commerzbank, Deutsche Bank, DHL, and Fresenius Medical Care, as well as the European Central Bank, the European Commission, and the German Federal Ministry for the Environment.
Market thesis: carbon emissions and climate impacts need a price tag
Climate change is already generating significant costs. However, as long as CO2 emissions remain largely inadequately priced, these costs emerge elsewhere: through direct physical damage, declining productivity, and assets that can no longer be insured on reasonable terms.
Banks and insurers are increasingly incorporating these real economic risks into their decision-making. Planet2050 expects that they may gradually tighten their conditions, including higher risk premiums, stricter lending criteria, and reduced insurance coverage for particularly exposed assets.
For companies, this creates pressure from two directions. Climate change affects their operations and asset values, while their own environmental footprint impacts climate and nature. This dual perspective, known as "double materiality", is increasingly becoming a benchmark for lenders and investors.
Carbon Removal can help address both challenges. It involves removing CO2 from the atmosphere and storing it durably, for example through biochar, a stable, carbon-rich form of charcoal that stores carbon in soils, or through forest restoration. Combined with genuine emissions reductions, these approaches can help companies reduce their climate impact while managing the financial risks of the transition.
Where banks and insurers stand today
Financial institutions generally distinguish between two main categories of climate risk:
Physical risks: Direct financial losses or damage caused by climate events such as heatwaves, droughts, and floods.
Transition risks: Financial impacts arising from the economic shift towards a low-carbon economy, including new regulations, technological changes, and changing market demand.
The cost of physical risk is becoming visible
At the Gipfel, Olaf Sleijpen, President of De Nederlandsche Bank and Chair of the Network for Greening the Financial System (NGFS), highlighted estimates suggesting that Europe's exceptional summer of 2026 could reduce EU GDP by around 1%, equivalent to approximately 180 billion euros. The estimate comes from an analysis by Triodos Bank. Most of the projected economic losses are expected to result not from destroyed buildings, but from reduced productivity and disrupted supply chains.
Regardless of the public debate surrounding climate change, its consequences are already measurable across almost every sector of the economy:
Labour and productivity: According to research by the think tank Verdant, economic output per working hour in European economies declines by approximately 3% for every additional degree Celsius above 30°C.
Agriculture: The June heatwave alone destroyed an estimated 9 million tonnes of grain, potentially resulting in approximately 2 billion euros in lost revenue for farmers, according to estimates cited by ABC News.
Transport and industry: Water levels on the Rhine fell to their lowest point in almost 150 years. According to estimates cited by the Kiel Institute for the World Economy, this could reduce German GDP by up to 0.2% in the third quarter.
Energy: Record-low river flows on the Loire, Po, Rhine, and Danube reduced hydropower generation and, in some cases, nuclear power output, including in France, according to the European Commission's Joint Research Centre.
Tourism: River cruises in parts of Europe were cancelled or disrupted as waterways temporarily became unnavigable.
El Niño: the next stress test
Even greater impacts may lie ahead. El Niño is a natural climate phenomenon in which the tropical Pacific Ocean warms, shifting weather patterns worldwide and tending to increase global temperatures.
On 8 October 2026, NOAA updated its El Niño forecast. For October to December, it estimated an 83% probability of a historically strong event. Such an event could exceed the strength of previous El Niño events since 1950.
The World Meteorological Organization expects El Niño to increase the likelihood of heatwaves, droughts, and heavy rainfall in many regions.
Reinsurers Munich Re and Swiss Re have also warned that weather-related damage and costs could continue to rise. NOAA notes that the specific regional impacts are likely but not certain. Nevertheless, global supply chains, food prices, and commodity markets remain exposed, and the coming months could become a real-world stress test of how effectively banks, insurers, and investors have priced climate risk.
Banks: aware of the risks, but lacking data
The ESG-Datenmonitor 2026, published by the Frankfurt School of Finance & Management together with openESG and Acuity Analytics, surveyed 154 professionals from banks and leasing companies.
When small and medium-sized enterprises do not provide their own climate or ESG data, approximately 89% to 94% of the surveyed institutions rely on sector averages. No more than 21% use company-reported data in standard lending processes.
This has consequences on both sides: a company performing better than its industry average may be unable to demonstrate this, while other risks may be incorrectly assessed.
Banks therefore focus on data they can reliably collect. Some 72% of respondents primarily consider a company's industry when making lending decisions, while only 37% take its own greenhouse gas emissions into account. These include Scope 1 and 2 emissions: direct emissions and emissions from purchased energy.
Representatives of major banks confirmed this picture at the summit. ING openly discussed the gap between actual risk exposure and what banks are currently able to measure.
Commerzbank presented an integrated biodiversity score that it uses to assess clients and manage its portfolio.
Climate risks are only qualitatively assessed. Source: MunichRe.
Insurers: withdrawing when risks become unpredictable
Insurance coverage is an often-overlooked foundation of the financial system, as banks are unlikely to finance assets without adequate insurance protection.
During panel discussions, participants reported that some insurers have already stopped covering certain nature-related risks, including risks associated with forests.
Commerzbank summarised the consequence clearly: Companies that cannot obtain insurance will ultimately also lose access to bank financing.
The gap between economic losses and insurance coverage is already substantial. According to Munich Re, natural disasters caused approximately 112 billion US dollars in global losses during the first half of 2026, of which only around 44 billion US dollars were insured. This leaves an insurance protection gap of approximately 60%.
Chart: 2026 H1 2026 natural disasters in figures, MunichRe
For investors, this is an important early warning signal. Rising insurance costs or the withdrawal of coverage can reduce an asset's value long before any physical damage occurs.
Regulation: fewer reporting obligations, but the same need for data
Under the EU's Omnibus I package, the EU has adopted changes to its Corporate Sustainability Reporting Directive (CSRD). These narrow reporting to companies exceeding both thresholds: 1,000 employees and 450 million euros in annual net turnover.
However, banking supervisors still require banks to identify and manage climate and environmental risks within their portfolios.
As a result, reliable data on smaller companies may become even harder to obtain: 49% of respondents expect ESG data collection to deteriorate rather than improve.
Photo: Pedestrian road blocked after flooding
Companies: from risk exposure to action
Stricter financing conditions are turning climate risk into a direct business concern. Companies unable to document their risks and emissions are assessed against industry averages, often to their disadvantage.
The effort required to establish a better data foundation can be manageable. According to the ESG-Datenmonitor 2026, 74% of respondents can collect a company's ESG data in less than two hours.
Companies can therefore take three steps: measure their emissions and climate exposure, reduce what they can, and, where appropriate, address remaining emissions through high-quality Carbon Removal. These steps can support a credible climate strategy. They provide a stronger basis for discussions with banks and insurers.
Carbon and nature markets: building reliable standards
Carbon Markets allow companies and countries to purchase credits representing CO2 emissions that have been reduced or removed elsewhere.
At the Gipfel, the European Commission presented its roadmap for Nature Credits - we had previously written about it here. This new instrument is still at an early stage and is intended to reward measurable improvements to ecosystems, supported by pilot projects and financing from the European Investment Bank.
The German Federal Ministry for the Environment highlighted nature-based carbon removals, such as forest restoration, as a dual opportunity because they store CO2 while restoring ecosystems. As renewable energy becomes standard practice, carbon removals are expected to play an increasingly important role through 2050.
Quality requirements for these projects are also becoming stricter. Both the UN mechanism under Article 6.4 of the Paris Agreement and the Integrity Council for the Voluntary Carbon Market (ICVCM) require safeguards, continuous monitoring, and protection against reversals. These include buffer pools, which are reserves of credits set aside to compensate for potential losses caused by fires or deforestation, as well as dedicated insurance products.
As Carbon Markets move towards greater regulation and institutional participation, emerging integrity bodies, stricter standards, and certification frameworks, such as the EU Carbon Removal certification scheme (CRCF), can strengthen investor confidence.
How Planet2050 evaluates climate and nature projects
Planet2050 is a Carbon Finance company that transforms climate and nature projects into investable Carbon Assets. Our approach addresses data limitations faced by banks and insurers. We rely on project-level data rather than sector averages.
Through the Planet2050 Hub - dedicated project screening and data platform - Planet2050 evaluates every project against four core questions:
Quality: Does the project deliver genuine, additional CO2 reductions or removals, measured according to recognised standards?
Permanence: How long is the CO2 stored, and what mechanisms protect against reversals, such as fires or land-use changes?
Physical risk: How exposed is the project site to heat, drought, flooding, or other climate impacts?
Insurability and monitoring: Can the remaining risks be covered through buffer pools or insurance, and is continuous monitoring, reporting, and verification (MRV) in place?
Only verified credits from projects passing this screening can enter the Planet2050 portfolio. These are included as Verified Carbon Credits. This makes risks transparent before capital is committed.
Bottom line
Europe's estimated GDP loss of 1% shows that climate change is no longer a distant risk, but a cost the economy is already bearing.
Banks and insurers may assess these risks more strictly in their decision-making. Companies without reliable data and credible climate strategies are likely to feel the consequences first. Measuring CO2 emissions, reducing them, and, where appropriate, addressing remaining emissions through Carbon Removal is therefore becoming an important factor in maintaining access to capital.
Planet2050 is building the Carbon Finance infrastructure that makes these Carbon Assets measurable, insurable, and investable.
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