TADB Portfolio Resilient Enhancement to Climate Change
The Adaptation Need
TADB, as a national development bank dedicated to agricultural financing, faces growing exposure to climate-related credit risk, especially from extreme weather events like droughts, floods, and shifting rainfall patterns that directly impact borrower productivity and repayment capacity. GCA’s technical work with TADB revealed that climate exposure is not yet systematically accounted for in the bank’s lending practices as current risk models do not account for borrower-level climate vulnerability or incorporate forward-looking climate projections – leaving the bank unable to adequately assess or manage climate-related financial risks.
GCA’s Added Value
GCA supported TADB to integrate climate risk into institutional processes and investment decisions. This included the development of portfolio-level climate risk heatmaps, which informed a climate stress testing methodology aligned with Bank of Tanzania (BoT) regulatory requirements. The assessment covered both physical and transition risks across direct and indirect lending. Given TADB’s core business in agriculture, a Climate-Smart Agriculture (CSA) catalogue was also developed, detailing crop-specific mitigation and adaptation solutions across the value chain, along with relevant implementation partners. This catalogue will inform a climate due diligence tool to be applied at the loan origination stage. These efforts have resulted in actionable outputs by embedding climate risk into credit assessments, risk policies, staff training, TADB’s digital loan systems, and product design.
Project goals
Receiving our targets
Mainstreaming Adaptation and Resilience
The technical assistance delivered a detailed climate risk assessment embedded into financial risk modelling to integrate climate risk management with internal risk management guidelines. These are designed to embed climate adaptation directly into TADB’s credit risk management and lending processes. Each tool has been tailored to TADB’s specific portfolio and institutional context. These outcomes mainstream A&R investments in financial institutions by systematically integrating climate-related risks and opportunities into core financial decision-making, moving beyond standalone “green” initiatives. This ensures that climate adaptation becomes an intrinsic part of credit risk management, loan appraisal, and portfolio allocation, thereby aligning financial performance with environmental resilience and influencing how capital is strategically deployed across operations.
Expected Outcomes
- Climate risk screening and assessment tools are operationalized within TADB’s risk management framework, enabling systematic identification and management of climate-exposed assets.
- Staff across key departments – including risk, credit, and strategy – are equipped with the knowledge and tools to apply climate risk insights in day-to-day decision-making, ensuring sustainability beyond the life of the project.
- TADB’s credit processes are adapted to reflect forward-looking climate risk, resulting in improved risk pricing, portfolio rebalancing, and the development of financial products aligned with climate resilience.
- The bank’s operations are more closely aligned with Tanzania’s national climate adaptation strategies and evolving international climate finance standards, positioning TADB as a credible partner for concessional finance.
- Insights from climate stress testing guide TADB’s reallocation of finance toward sectors and regions with higher resilience potential, enhancing both financial performance and development impact.
Timeline
Project status
Technical Assistance Preparation
GCA Support Implementation
GCA Support Completion
Monitoring
Finance
Project Investment Value
Total Investment Value
IFI Investment Value
$66M
Other Investment Value
N/A
Contacts
General Media Inquiries
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ClimateFinance@gca.org