Exploring how investors can move from classification to capital allocation

Climate adaptation is moving from a sustainability concern to an investable theme, and investors should focus on where capital can capture economic value from resilience spending.

• Schroders evaluated 102 adaptation and resilience activities across infrastructure, products, services, digital technologies and financial instruments; 95 had benefit-cost ratios above one.
• The framework separates opportunities into resilient assets and companies, adaptation and resilience solution providers, system resilience, and financial resilience, while noting that specific adaptation actions are easier to measure than broader resilience outcomes.
• CalPERS has included adaptation in its climate-solutions strategy since 2023; its climate-solutions portfolio is approximately $60 billion, with a target of $100 billion by 2030, although adaptation remains a small component.
• Tailwind Ventures estimates that global adaptation and resilience spending is approximately $1.4 trillion annually, with utilities, construction, manufacturing, agriculture and pharmaceuticals among the sectors facing rising adaptation needs.
• Potential opportunities include catastrophe bonds and insurance-linked securities, nature-based solutions, digital and AI-driven risk tools, water infrastructure, grid modernization, workforce resilience and climate-health solutions; 70% of the global workforce is exposed to extreme heat.

Takeaway: Investors should move beyond taxonomies and identify investable solutions that reduce physical climate losses, while recognizing that high social value does not automatically translate into attractive financial returns.