The imperative for investment in climate adaptation has never been clearer, and ten years after the Paris Agreement, 2025 marks a pivotal moment. The loss and damages from climate disasters is estimated to reach as high as $3.1 trillion by 2050, and in 2025 alone it is on track to reach $145 billion according to the World Economic Forum, a 6% rise on 2024 figures¹. The impacts of climate change are becoming increasingly evident around the globe. While the Baku to Belém Roadmap sets out a pathway to mobilise at least $1.3 trillion in climate finance by 2035, only $65 billion of adaptation finance is currently being deployed² and the adaptation finance gap is substantial, currently representing over $200 billion per year in developing countries alone.
The trajectory is clear – we have more certainty about the speed and direction of climate change over the next five to fifteen years and beyond than about interest rates, inflation, tariffs, artificial intelligence or geopolitics, all of which form the foundation for investment decisions. As scientists have concluded that “some changes are now unavoidable and/or irreversible”, the investor community is presented with an “unavoidable opportunity” – to decide how to invest in adapting and building resilience to climate change.
The concrete opportunity for investors begins in infrastructure and increasingly in technology, but will touch every part of the economy and society as climate change unfolds.
The recognition of this “unavoidable opportunity” set the stage for a roundtable at London Climate Action Week 2025, hosted by Pollination, UNDP’s Insurance and Risk Finance Facility and Global Adaptation & Resilience Investment Working Group (GARI), in partnership with Zurich Insurance, where leaders from across the globe shared their insights.
Bridging the awareness gap
As climate impacts intensify, a key theme emerging from the roundtable was the evolution from climate risk management to opportunity assessment within financial institutions.
While some market leaders are already conducting sophisticated scenario analyses, many institutions are still developing their approach to climate risk assessment. The standardisation of frameworks, particularly in real assets and infrastructure, is helping to close this awareness gap.
Beyond assessing the risk to investments of climate change, investors are beginning to turn toward evaluating opportunities. Process-based approaches like the Climate Resilience Investment Solutions Principles (CRISP) can help investors identify climate resilience and adaptation investments. The application of Large Language Models (LLMs) can identify investment opportunities in companies that do not yet label their solutions as supporting adaptation or climate resilience.
Although markets remain predominantly focused on mitigation opportunities, investment is gaining traction in critical adaptation areas such as water, agriculture, and enabling technology.
Mobilising capital
There is a clear opportunity to leverage climate adaptation finance to unlock risk-informed, scalable and profitable investments in private markets.
For asset managers, climate adaptation requires a dual approach. Risk analysis across asset classes is essential for understanding the distribution of potential impact from climate change. Real estate, infrastructure, agriculture and many commodities, are more directly exposed than others to the impacts of climate change, presenting initial high priority areas for analysis of downside implications.
On the other hand, climate resilience and adaptation present investment opportunities. The implementation of resilience measures, from water efficiency improvements to strategic shading solutions, is becoming increasingly critical for asset protection and therefore areas of potential investment. Adaptation measures often face resistance due to initial costs, highlighting the need for better articulation of their long-term value proposition. Beyond reducing potential risk and impact, technologies that can provide a strategic advantage in the context of climate change-increased complexity offer additional investment opportunities.
Blended finance solutions that mix limited public resources with larger pools of private finance may act as a bridge to unlock and mobilise investments, particularly to address the critical investment gaps for emerging markets. A significant portion of financing for resilience also needs to occur at the household and small and medium enterprise levels to ensure the fiscal resiliency that could sustain the long-term development goals of the communities most vulnerable to the impacts of climate change. Therefore, there needs to be more sophistication in the development and use of blended finance solutions that could leverage and deepen local capital markets.
A comprehensive approach to climate risk and opportunity, combined with standardised metrics and outcomes, is essential for achieving scale in adaptation investment.
Insurance key to attracting capital
Our London Climate Week roundtable highlighted a crucial opportunity to connect climate risks to insurance solutions. Physical climate risk is of growing importance to investors, and the financial system is evolving in understanding the broad opportunity for climate investment. In the UK, for example, there is a 6% annual average loss on livestock in the agricultural sector due to weather; those losses are expected to double by 2050 due to climate change. Agriculture and other industries are beginning to notice, and insurance is now a core part of that conversation.
Insurance is recognized as an enabler, with need for stronger integration between insurance mechanisms and broader resilience investments. We have limited ability to change the trajectory of climate change and where people live and assets are located, but we can reduce losses by assessing and managing vulnerability.
Insurers and the wider financial community also needs to work with governments to ensure a constructive regulatory environment to support innovation. Most insurers focus on 12-month time frames – the typical insurance coverage and renewal cycle. Investors consider investment cycles of one, three, five, and ten years. These time frames need to be aligned so that insurers and investors can manage the increasingly complex risk environment together. Insurers will move to a “predict and protect” mindset, in which they will perform longer-term modelling, consider financing and then lean into protecting against climate risks, which may require longer duration considerations.
The good news is that insurance models are now demonstrating the value of adaptation and climate resilience. New data and models enable insurers to encourage adoption of specific measures, such as recommending that the agricultural industry grow crops in a certain way, or that governments incentivise or require infrastructure owners to secure climate protection.
These are just some examples of how insurance will play a pivotal role to de-risk climate investments and strengthen resilience. The message is simple: Incorporating practical resilience measures ensures insurability, which attracts investment.
Looking Ahead to COP30
As we approach COP30, we face a critical moment to scale climate adaptation investment. We have much more certainty about climate trajectories and growing evidence of the economic impacts. This creates both an imperative and opportunity for immediate action for the financial community.
While awareness of climate adaptation is growing, the pace of investment must accelerate. The financial sector has a unique opportunity to shape a resilient economic future by moving beyond risk awareness to active investment in adaptation solutions.
The opportunity now lies in creating standardised, scalable approaches that can channel capital effectively towards resilience-building projects across all types of economies.
COP30 presents a critical window for financial institutions to demonstrate leadership in climate adaptation investment. By acting now to standardise climate risk assessments, develop innovative financing mechanisms to mobilize investment, work in partnership with governments, and strengthen the integration of insurance solutions with resilience investments, investors will have the need, tools and motivation to seize this “unavoidable opportunity”.
¹ https://www.reuters.com/sustainability/climate-energy/costs-climate-disasters-reach-145-bln-2025-says-swiss-re-2025-04-29/
² https://www.climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-2025/
