Climate adaptation and resilience solutions: A framework for investors

As described in the first two articles in our series on climate adaptation and resilience, the physical effects of climate change are already making an impact on the global economy, and this dynamic will likely continue to intensify.

Extreme weather and long-term changes in climate disrupt economic activity by interrupting supply chains, reducing labor productivity, creating commodity instability, driving workforce migration, and uprooting lives. In 2025, global economic losses from natural catastrophes totaled $260 billion.¹ By 2050, Moody’s projects that the impacts of both acute and chronic physical climate risk could reach $41.4 trillion assuming business as usual.²

Demand for climate adaptation and resilience (A&R) is large and growing

These risks are driving demand for solutions that strengthen the ability of businesses, governments, and households to better withstand and thrive in a more challenging environment.

The benefits of adopting climate adaptation solutions have been shown to far outweigh the cost. A recent report by Boston Consulting Group (BCG) and Temasek found that first movers incurred costs five times lower than the cost of inaction.³ The World Resources Institute (WRI) highlighted that every dollar spent on resilience could deliver more than ten times the cost in benefits.⁴

While we believe all businesses should incorporate climate resilience into their risk management frameworks, climate A&R solutions represent a distinct and attractive investment opportunity for private investors.

Defining the climate adaptation and resilience solution opportunity set

McKinsey estimates that the addressable market opportunity for climate adaptation solutions could total $1 trillion by 2030.⁵ While there is no standardized framework to identify the universe of climate A&R investments, most market maps will consider two primary dimensions when defining A&R solutions.

The first dimension is to identify whether a product or service enables adaptation and resilience before, during, or after a climate hazard. The Global Adaptation & Resilience Investment Working Group's (GARI) framework is often referenced to help delineate between these three phases, however there can be some overlap:

• Prepare/prevent: solutions that enable prevention and preparation before a climate event.
• Respond: solutions that increase the ability to respond during a climate event and withstand adverse conditions.
• Recover: solutions that increase the ability to recover after adverse physical impacts.

The second dimension is to categorize different types of A&R solutions into themes using a bottom-up approach. The table below borrows from the common categories across several reports—including those by BCG and Temasek, RBC Capital, McKinsey, and WRI—to outline a comprehensive set of adaptation and resilience solution types. The table also incorporates the three climate A&R phases with examples of solutions.

Common categories for climate adaptation and resilience solutions

A broader lens for climate investing

The breadth of these categories underscores how wide-ranging climate A&R solutions need to be across physical risks and hazards, sectors, market segments, and business models. Certain climate A&R solutions overlap with climate mitigation solutions, though investors should be mindful of opportunities that may be at odds with long-term emissions reduction goals. For example, the increase in demand for cooling solutions will increase energy use without energy efficiency in mind and the production of steel and cement for adaptation infrastructure like sea walls can generate significant emissions absent any technological innovations.

Investment opportunities in resilience may also provide exposure to sub-themes that can be underrepresented in climate mitigation solutions including water, health, and community—areas where demand arises from practical needs related to infrastructure and livelihoods.

Defining the universe of climate A&R solutions helps uncover how this theme is showing up in investor portfolios across public and private asset classes. In our next article, we will explore in greater detail how climate A&R represents a demand driver for various types of companies and highlight key areas for investment within this emerging theme.