The case for investing in climate adaptation
The impacts of climate change are becoming increasingly visible, from soaring temperatures to devastating floods. While climate mitigation remains important, some experts are urging governments and businesses to expand their focus to include adaptation.
Climate mitigation v climate adaptation: What’s the difference?
While both terms relate to how we respond to climate change, they are very different approaches.
Climate mitigation seeks to reduce the extent to which the climate changes, such as by reducing greenhouse gas emissions. In contrast, climate adaptation is about preparing to deal with the effects of climate change.
In the past, climate mitigation has been the focus, with a target of limiting average global temperature rises to 2°C above pre-industrial levels. However, the focus is starting to shift to adaptation as more communities and businesses are already dealing with the effects of climate change.
The two approaches don’t have to compete. In fact, doing what we can to limit climate change while being pragmatic about the effects we are facing now and those we could experience in the future is sensible.
This is the approach advocated by researchers at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics (LSE).
Swenja Surminski, professor in practice at the institute, said: “Reducing emissions is essential – full stop. But it’s not a substitute for adaptation. We don’t get to choose between cutting emissions and adapting to their impact. The climate change that’s already locked in demands both.”
They added: “These [climate adaptation] adjustments can include the construction of resilient infrastructure, the implementation of nature-based solutions, the use of early warning systems, and the development of disaster risk financing instruments.”
Climate adaptation projects could deliver economic returns
An article from the LSE (28 July 2026) suggests that climate adaptation is currently overlooked by finance ministers. A survey carried out in 2025 found that only 1 in 4 ministries of finance reported analysing public expenditure and financing needs for adaptation and resilience.
The researchers at the LSE estimate that by 2050, climate change could reduce global GDP by between 3% and 15% under plausible warming scenarios. With an increase of investments into climate adaptation efforts, there is a chance that we might be able to lessen the global GDP drop.
The article also notes that investments into effective adaptation could deliver strong returns, with benefit-to-cost ratios of around 4:1 on average.
Some examples of effective climate adaptation projects that were highlighted in the article are:
Urban cooling strategies,
Climate-resilient infrastructure,
Improved water and agricultural management systems,
Disaster preparedness measures and reforms that strengthen financial resilience.
From an investor perspective, supporting climate adaptation initiatives could align with your values and potentially deliver returns.
While the market is still developing and is likely to evolve in the coming years, there are ways for investors to gain exposure to climate adaptation projects now. You might invest through funds that consider associated themes, explore large infrastructure projects, or assess companies to review how prepared they are for the impact of climate change.
Remember, all investments carry some risk, and the value of your investments could fall as well as rise. Past performance is not a reliable indicator of future performance.
The article, and its reports highlights that for policy makers and finance ministers, the next steps are clear, they must make climate risk a part of mainstream economic planning. If this suggestion is listened to, then it may well be that the number of investment opportunities available could rise in the future.
Consider opportunities alongside your investment strategy
If you are interested in investing in climate adaptation solutions, and would like our support when reviewing your investments, please get in touch. Your financial adviser can work with you to create a portfolio that works for you.
Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
