Insights from the Red&Blue Annual Symposium (2025)
Authors: Abdi Mehvar, Tom Daamen
Photos by Annelies van ‘t Hul Fotografie
How are Dutch banks, pension funds, and insurers responding to the growing physical risk of climate change on real estate and infrastructure? During the Red&Blue Annual Symposium on 10 October 2025 in Rotterdam, a focused session brought together experts from financial sector organizations such as Bouwinvest, the Nederlandse Waterschapsbank and APG to explore this question. Together with professionals from the City of Rotterdam, City of Amsterdam, Deltares, and the Ministry of Infrastructure and Water Management, the aim was to share the emerging responses to climate risk and discuss the institutionalized logics that shape them.
In climate research and practice, there is a growing need to strengthen a shared understanding of climate adaptation decision-making across sectors and spatial scales, and create a breeding ground for more collective, public-private approaches to adaptation. Working on this starts with meeting with each other, developing a shared language, and understanding each other’s perspectives and solution spaces. This creates the space to identify how each actor can contribute to integrated adaptation strategies in the built environment—an objective that lies at the heart of the Red&Blue research program led by TU Delft.
In Rotterdam, the session was opened by associate professor Tom Daamen (TU Delft), who reflected on earlier sessions that revealed a variety of priorities and values expressed by experts representing their respective organizations. These differences, he argued, stem not only from institutional roles but also from deeper value systems and logics that shape how climate-related strategies and decisions are justified. This observation prompted the team to examine whether such patterns could be identified through the lens of ‘institutionalized logics’. These logics are understood as relatively stable assumptions, values, and rules that structure how actors organize themselves in their respective fields of practice (Friedland and Alford, 1991; Thornton and Ocasio, 1999; 2008; Cobb, Wry and Zhao, 2016). In financial settings, these logics shape funding decisions, risk asssessments, and thus play a major—if not determinant—role in actors’ financial performance.
Risks, Roles and Responses
Building on the idea of institutionalized logics, TU Delft’s postdoctoral researcher Abdi Mehvar performed an AI-supported analysis of more than 120 publicly available documents—ranging from strategic reports, and sustainability disclosures to risk assessments, and investment frameworks—from 33 Dutch financial institutions. His work thus explores how banks, insurers, and pension funds understand physical climate risks, the strategies they adopt in response, and identifies what reasoning shapes their approaches to climate adaptation. In Rotterdam, Mehvar started his story by outlining these three items.
First, Mehvar’s research shows that the financial sector acknowledges both physical and transition risks, though different institutions emphasize them differently. Some banks and insurers, particularly those heavily exposed to real estate assets, focus more directly on physical threats such as flooding and heat stress. However, others place greater weight on transition risks, aligning portfolios with emissions reduction goals and the 2015 Paris Agreement. Despite these differences, flooding stands out across the sector as the most consistently highlighted hazard, followed by heat stress, drought, and subsidence—risks increasingly recognized in Dutch cities.
Financial sector organizations also face distinct challenges. For example, banks, holding large mortgage portfolios, are increasingly aware that many households cannot easily finance climate-proofing measures. Insurers confront the growing reality that large-scale flood events may become only partially insurable due to scale, and models uncertainty. In addition, pension funds struggle to meaningfully integrate physical risk into long-term investment and valuation models—an issue widely noted in institutional investment research (Christensen et al., 2022). These dynamics entail that while the risks are broadly recognized, the capacity to act is unevenly distributed across organizations.
Mehvar also looked into where adaptation efforts by the financial sector are currently concentrated. Results show that a large share of measures occur at the building scale—including waterproofing, foundation reinforcement, and green roofs—or at the national scale, such as public flood defense programs and resilience-oriented financing. Increasingly, financial sector organizations—especially pension funds—are also directing investment toward nature-based and ecosystem restoration initiatives. However, neighborhood or distric-level adaptation efforts appear to be rather limited, despite its importance for managing heat stress, surface-water flooding, and social vulnerabilities.
In addition, Mehvar’s results highlight that financial actors differ in how they view their own roles and responsibilities in driving climate adaptation. They show that, generally, responsibilities are broadly considered as shared, but that this collective outlook is interpreted differently across organizations. For example, banks frame climate adaptation as a shared responsibility among government, clients, and financial actors. Insurers emphasize self-governance and preventive action, calling on government for broader systemic protection, and on clients for local action. From their perspective, prevention is viewed as pre-condition for insurability. Pension funds adopt a stewardship model, emphasizing their role as stewards integrating climate risks into investment decisions, setting portfolio targets, and actively engaging with investors, while emphasizing that meaningful adaptation ultimately depends on government creating the enabling conditions.
Three Dominant Logics Stand Out: Financial, Compliance, and Responsibility
A key focus of Mehvar’s research is to indentify the ‘institutionalized logics’ that underly what financial actors do in response to climate risks. In Rotterdam, he uncovered that for most banks, insurers, and pension funds, three logics stood out as especially influential. He labels the first as Financial Logic, where decisions are guided by considerations of return on investment, portfolio performance, and cost efficiency. The second is a Compliance Logic, shaped by regulatory frameworks such as the EU Taxonomy, CSRD reporting requirements, and international climate commitments such as Paris Agreement. The third is a Responsibility Logic, which places importance on public values like affordability, solidarity, and social equity.
Mehvar noted that other logics also play a critical role in shaping responses, like an Ecological Resilience Logic that emphasizes biodiversity, water safety, and long-term ecosystem health. Among insurers, a Prevention Logic appears to be particularly strong (Kunreuther and Michel-Kerjan, 2009)—linking coverage and affordability to the extent that clients and municipalities take preventive action. In contrast, pension funds often draw on a Stewardship Logic, positioning themselves as long-term influencers of the companies and projects they invest in, rather than direct implementers of adaptation measures.
The research demonstrates that the values underlying different logics as reflected in public statements published by the financial sector, do not always align. This mismatch is likely to create tensions, both internally and externally, as investment decisions reflect value trade-offs that may cause disappointment or even outrage in emerging climate adaptation practices.
One value tension arises between insurability and solidarity, when some insurers stress that extreme events like systemic flood risk may be technically uninsurable. This stands at odds with general public expectations: people expect protection, especially against flooding. This tension is apparent in governance debates about how private insurance can manage isolated risks, but that systemic climate impacts require solidarity-driven solutions (Paudel, 2012; Surminski, 2014).
Another example refers to the conflicting values behind risk reduction and household affordability. While insurers increasingly demand adaptation measures (e.g., green roofs, waterproofing, elevation) as a condition for coverage, many households cannot afford these upfront investments, even when they are considered necessary. This reflects a classic distributive justice problem in climate adaptation: responsibility for risk reduction is often delegated to households that lack the financial capacity or competencies to act (Siders, 2019; Elliott, 2021).
A third example concerns the financial logic, which tends to privilege carbon-related metrics over broader—and potentially more valuable—measures of resilience. Banks and pension funds frequently steer their portfolios using quantifiable indicators such as CO₂ intensity, i.e. metrics that reduce uncertainty and align with established valuation models (O’Dwyer and Unerman, 2020). In contrast, indicators of ecological resilience related to soil, water, and biodiversity are harder to quantify, even though they are critical for adapting to physical climate risks. This pattern aligns with wider scholarly findings that ecological resilience unfolds over long timescales and is difficultly monetized, whereas financial logic continues to be oriented toward near-term returns (Folke et al., 2010; Jordan and Huitema, 2014).
Mismatches Across Scales and Sectors
Mehvar’s findings highlight that the above-mentioned misalignments and underlying tensions observed between the institutionalized logics may prevent financial actors to invest in adaptation, possibly also hindering the development of integrated strategies and decision making. On top of this, the discussion with financial sector representatives in Rotterdam show that barriers to effective adaptation emerge at two levels: across scales and across the sectors to which the logics refer.
With respect to scale, a comparative reflection during the session highlighted that the financial logic is most dominant at the global scale, shaping decisions about where—across countries and regions—to invest in climate adaptation. By contrast, the responsibility logic is much more context-dependent, shaped by local legislation, standards, and societal expectations that vary across societies. Related to this, investors highlighted that compliance and responsibility logics are differently considered across institutions and countries. Dutch pension funds and investors, for example, are becoming increasingly willing to accept lower short-term financial returns in exchange for long-term climate resilience, as reflected in their ESG-driven strategies—an approach less common in some other countries like the US.
Other scale-related barriers concern the availability, quality and aggregation of climate-risk knowledge and data across local, regional, national, and global levels—insights that were also revealed in earlier Red&Blue expert sessions (see this report by Mehvar et al., 2023). These results suggest that similar scale misalignments exist within institutionalized adaptation strategies. They help explain, for example, why actors show limited willingness to invest at the neighborhood scale, while demonstrating greater readiness to support adaptation measures at larger scales such as national, and European levels. This reflects the dominance of logics—particularly financial and compliance logics—that align more readily with larger-scale decision-making than with localized interventions. This challenge echoes findings in multilevel climate governance research, which show that global finance tends to prioritize mobility and risk diversification, whereas effective adaptation calls for more local anchoring and co-investment (Keohane and Victor, 2011; Bulkeley and Betsill, 2013).
Beyond scale-related issues, mismatches also arise between sectors—not only among financial institutions themselves, but also between these institutions and other actors. Importantly, such cross-sector mismatches do not imply that investors are unwilling to act. Rather, they reflect institutionalized logics that constrain or prevent certain actors from taking action.
An example of such sectoral misalignment concerns a persistent gap in mutual understanding about the basis for action, stemming largely from weak communication across actors. During the session in Rotterdam, participants affirmed that although Dutch banks, insurers, and pension funds broadly agree that climate risk constitutes a shared responsibility among government, private actors, and citizens—as reflected in their publications—communication across sectors still seems limited. As a representative from the City of Amsterdam remarked, “If we don’t communicate our expectations, we cannot assume the other parties will act. We remain vulnerable because responsibilities are not well communicated and thus remain unclear.” This reflection led to a broader question about disclosure: do any financial institutions explicitly state that climate change poses a potential disruption to their core business? The same representative noted that the municipality has publicly acknowledged climate change as a direct threat to Amsterdam’s future, which has helped to take action. Participants questioned whether financial institutions perceive a comparable existential risk to their own business models—and, if so, whether that recognition is translating into meaningful change.
In addition to the communication and disclosure issues, participants also referred to an interpretation issue reflecting on how concepts emerging from the publicly available documents can be interpreted differently in practice. For example, “stewardship” appeared to signal a more proactive, climate-forward role among pension funds, while banks favored shared governance approaches and insurers emphasized insurability. This raised the question of whether these distinctions reflect actual differences in organizational behavior or merely in reporting language. As one investor acknowledged, some institutions pursue climate stewardship not only due to regulatory compliance, but because their organizational mission supports going further. As another example, participants noted that sustainability and ecological resilience logics are sometimes interpreted differently across institutions. While sustainability is often used as a broad, overarching term, ecological considerations can form one component of it. It was also highlighted that the prominence of ecological logics in reports may also be driven by regulatory requirements and existing mandate for institutions to explicitly report on ecology and biodiversity issues.
Logic Transformation
The mismatches described above—both across scales of action and between sectors—help explain why financial institutions continue to rely predominantly on financial-return calculations and regulatory compliance, while placing less emphasis on other logics grounded in stewardship and collaborative approaches to adaptation. This underscores the need to transform existing institutionalized logics to incentivize the latter, as also argued by Besharov and Smith (2014) and Smets et al. (2015). Yet a critical question remains: how can financial logic be reoriented to support adaptation?
Similar considerations apply to other logics and their underlying values. As climate impacts intensify, it is becoming clear that insurability—central to the prevention logic—may no longer be sufficient as a stand-alone risk management strategy. And although the responsibility logic emerged as one of the three dominant logics within the Dutch financial sector, a stronger emphasis on public values such as solidarity and social responsibility may be required to ensure that vulnerable communities are not ignored or left behind.
Final Reflections and Future Directions
Participants in the Rotterdam debate emphasized the importance of understanding why financial actors produce reports and the audiences they seek to address. Reports can serve multiple functions: fulfilling regulatory obligations, informing investors, shaping public image, or advocating for particular issues. As one participant noted, it would be valuable to assess whether similar analyses can reveal the underlying motivations behind these communications and how institutions strategically tailor their messaging for different audiences.
The group also reflected on whether the institutionalized logics identified in public documents fully capture the views of professionals working within these organizations. Participants acknowledged that what institutions choose to communicate externally may differ from internal discussions, influenced by disclosure policies, compliance requirements, perceived risk exposure, and past decision-making experiences. This raises a key question: how to uncover and validate the tensions discussed behind closed doors? This could inform societal debates on the impacts of climate change in the built environment and support more collective ways forward in adaptation.
Participants further expressed interest in examining how perspectives evolve over time. They suggested analyzing multiple years of reporting to trace shifts in language, emphasis, or framing that might indicate changing logics or a deeper understanding of climate risk. Related to this, the group discussed whether Dutch financial institutions—mirroring developments in the United States—may be reallocating capital away from high-risk areas. Monitoring annual reports could help identify whether such movements are occurring, the motivations behind them, and the potential implications for climate-vulnerable regions and their communities. This also raises the practical question of when and how to detect these signals.
The session concluded with agreement on next steps: to convene more focused expert dialogues aimed at further consolidating the findings, and to move beyond document analysis toward more in-depth analyses of how Dutch financial professionals interpret and act on climate risks in daily practice.
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