The national comprehensive plan for climate change adaptation through 2030, established in December 2008, was followed by measures set in five-year cycles, and this year the fourth adaptation measures, drawn up jointly by the relevant ministries last year, are in effect. A debate over whether those 18 years of accumulation can be bound into a single statute took place on the 9th at the National Assembly Members' Office Building. It was the "Forum on the Need to Enact a Climate Adaptation Law in the Climate Crisis Era and Its Legislative Tasks," hosted by Rep. Cho Ji-yeon of the People Power Party. On the same day, the Bank of Korea, the Financial Supervisory Service and the Korea Meteorological Administration released a joint climate stress test plan.
Shin Ji-young, head of the climate adaptation policy office, who gave the keynote presentation, pointed out that there are limits to driving adaptation policy under the current Framework Act on Carbon Neutrality alone. The Framework Act on Carbon Neutrality and Green Growth, enacted in 2021, contains 11 adaptation provisions setting out climate crisis monitoring and forecasting, the use of climate change impact data, and the way adaptation measures are established. It is a form in which adaptation is placed on top of a law centered on reduction. The argument that a separate legal framework is needed starts here.
Rep. Cho introduced the "Special Act on Climate Crisis Adaptation and Strengthening Resilience" as the lead sponsor last month. This forum was a follow-up discussion on that bill. Song Young-il, president of the Korean Society of Climate Change Research, served as moderator, and Nam Sang-wook, professor in the department of business administration at Seowon University, Jang Eun-hye, head of the climate change legislation team at the Korea Legislation Research Institute, Yoo Jae-kook, legislative researcher at the National Assembly Research Service, and Lee Chae-won, director of the climate adaptation division at the Ministry of Climate, Energy and Environment, took part in the discussion.
Two lines of proposals came out of the discussion. Professor Nam said a climate insurance act to compensate for climate damage should be prepared separately, and team head Jang held that adaptation policy should be made measurable through indicators while going the route of a newly enacted statute. An interesting diagnosis came out as well. In public surveys, climate change has been named the most urgent environmental problem since 2023, but responses saying that I am likely to suffer serious damage fell far short of that.
The financial plan announced the same day tries to narrow that gap in a different language. The climate scenario the three institutions are building together focuses on climate change and policy change that could materialize within the next five years. This is where it diverges from earlier financial-sector tests that looked decades ahead, such as the 2050 carbon neutrality pathway. The scenario will cover the scale of natural disaster damage caused by abnormal weather and how changes in carbon reduction policy affect variables such as GDP and prices.
Financial firms will use this scenario to measure loan losses and insurance loss ratios. Climate risk is divided into physical risk and transition risk, and appears on financial statements in the guise of credit, market, operational and insurance risk. The path by which drought and floods erode collateral value, and the path by which a strengthened emissions trading scheme shakes the repayment capacity of particular industries, each become subjects of calculation.
The schedule has two stages. In the first half, the focus is on building the scenario, and in the second half, the impact on financial firms will be examined. The design work will be joined by researchers at Korea Institute of Energy Technology, the Korea Insurance Research Institute and the Korea Insurance Development Institute, and groups of climate experts from major financial firms. The FSS and the Bank of Korea plan to produce loss estimates separately on their own and compare them against the financial firms' results, and to send simplified forms to institutions that lack analytical capacity.
Added to this are the supply of low-carbon transition funds, inspections of how financial firms manage climate risk, and workshops to share risk measurement techniques. On adaptation, the law is trying to establish a basis, and finance is trying to put a price on it. Neither of them prevents disasters, but once damage is turned into something calculable, the priorities of preparation change.
Both the bill review and the draft scenario are scheduled within the year, and the range of participating financial firms and whether the results will be disclosed have yet to be confirmed. In the meantime, there are things individuals can try. Open the detailed implementation plan for climate change adaptation measures in the local government where you live, and check where in your neighborhood the flood risk zones or heat wave shelters are marked. The sense of someone else's problem revealed in the survey starts to shrink a little from the moment that map is unfolded.
