Investors urged to back climate adaption and resilience as roadmap unveiled

Investors are being urged to focus on climate adaptation and resilience as US firms increasingly turn away from environmental, social and governance initiatives.

Experts from the University of Cambridge’s Institute for Sustainability Leadership (CISL) and Investment Leaders Group called on investors to prepare for a hotter world as they unveiled a roadmap to manage physical climate risks within portfolios.

The guide, released on Wednesday, aims to equip investors with tools and strategies to back companies focussing on adapting to the impacts of global warming.

It comes as corporate America shifts back towards more conservative social and political stances following Donald Trumps US election win.

Last week, Meta scrapped its diversity, equality and inclusion (DEI) programme and BlackRock left the UN-backed Net Zero Asset Managers alliance – the latest in a growing list of US firms ditching DEI initiatives and leaving industry groups focussed on driving the net zero transition.

Dr Nina Seega, director of the CISL’s Centre for Sustainable Finance, said: “Even as the political tides are turning away from a focus on sustainability, the impacts of climate change are becoming more and more deadly and damaging.

“Investors’ who want to protect their money will need to look at climate impacts and adaptation.

“Anyone who cares about long-term value will need to both invest in resilience of their portfolio and support a more resilient economy as a whole.”

Often adaptation and resilience do not receive the same attention as “mitigation” – efforts to curb planet-heating emissions and limit global warming.

But the CISL experts said investors need to respond to the financial risk posed by increasing extreme weather events, citing the widespread damage of the current Los Angeles wildfires, last year’s deadly flooding in Valencia, Spain, and Hurricane Milton causing estimated losses as high as 34 billion dollars.

They argued that investors not only play a critical role in addressing the vulnerability of both communities and financial systems, but resilient strategies offer an essential competitive advantage.

The CISL roadmap outlines how early integration of climate risks in the investment process enhances preparedness and decision-making.

It also explores how investors can engage with policymakers, businesses and the financial sector to drive systemic changes, including by aligning private capital with global adaptation goals, enhancing corporate disclosure standards and collaborating with the broader financial system to unlock innovative financing models.

Dr Seega said: “The clock is ticking — investors face a critical choice: act now to safeguard portfolios and invest in resilience, or risk the future of both their assets and the global ecosystem.”

A handful of investors welcomed the roadmap, with Eric Nietsch, head of sustainable investing, Asia, at Manulife Investment Management, saying: “We view climate adaptation and mitigation as equally important, not mutually exclusive. A comprehensive approach to managing climate risk must address both.

“Too often, the focus remains on mitigation with the physical risks either overlooked or underestimated.”

Mette Gahr, climate investment analyst at Zurich Insurance, said: “Addressing the climate crisis requires a massive mobilisation of private capital towards mitigation, adaptation and resilience building.

“This guidance aims to bridge the knowledge derived from physical climate risk assessments with the investment decision-making process.”

Sabrina Nagel, global policy and finance advisor at the Atlantic Council Climate Resilience Centre, said: “Adaptation and Resilience is becoming the currency of the future.

“The CISL guide not only highlights why it’s crucial for investors to address physical climate risks but also provides practical advice on how to integrate these risks into the various stages of the investment process.

“It also highlights the need to advocate for an enabling environment, where collaboration will be key to shaping the New Adaptation and Resilience Economy.”