Climate investment has a blind spot: Adaptation
The effects of climate change are inevitable. It’s a nuance we don’t hear much in the media, but the crux of our work lies in slowing the change down. Stopping it might be possible in the very long run, but the change in climate is happening right now and it will not stop in the near future. Given the grave consequences, it’s no surprise how attention and investment flows towards slowing the pace, but all we do is buying time to prepare for the inevitable
The effects of climate change can already be felt all over the world. Extreme weather events become more and more common, causing more than 20 million people to seek refuge elsewhere each year.
In other words: with each passing day, climate change becomes a more tangible reality, with devastating consequences. And we need to adapt to it – because temperatures are not going to magically stop rising.
Dealing with climate change and preparing for it represents a glaring blind spot in today’s climate tech investment scene.
Our way of life is changing
It’s vital that we continue to invest in technologies which slow the pace of climate change. This gives us time to further adapt. But adaptation itself needs to become its own defined movement within our current climate tech space.
There’s prodigious opportunity for the first investors to think seriously about how to fund adaptation efforts at scale. In February, the IPCC released their Climate Change 2022: Impacts, Adaptation and Vulnerability report, which summarised some of our efforts to evolve the way we live, work and travel.
In short: some adaptation is happening or being planned now, but proposed measures aren’t enough to cope with projected impacts. As the report states, “Mobilization of and access to adequate financial resources,” would make a significant contribution in slowing down climate change.
Whoever steps up to invest meaningfully in adaptation will enjoy a relatively blank canvass to work with. Current progress spreads unevenly between regions and sectors; there are plenty of gaps to fill and touchpoints to connect.
Much of the future remains uncharted and many of today’s initiatives focus on immediate and near-term impacts. That’s welcome, but longer-term thinking enables truly transformational adaptations to our lives. And right now, that isn’t really happening. This sort of unexplored space is the ideal fit for a certain type of investors.
We can’t afford to do nothing
These investors need to start showing up. The IPCC report also contains some hard truths about the price of apathy. Lack of investment is putting soft limits on many regions’ ability to adapt. Meanwhile, the ongoing effects of climate change are enforcing hard limits; you can’t adapt once the damage is already done.
Stagnating progress also gives rise to what the IPCC calls “maladaptive responses.” These inadequate measures aren’t simply a harmless consequence of short-term thinking. Many actually risk entrenching climate vulnerability and economic inequality in the long run. As always, it is vulnerable people that inevitably suffer most when this happens.
Faced with these challenges, it’s well worth noting that more is needed from politicians and developers themselves. Right now, long-term large-scale adaptation to climate change doesn’t really seem to be a topic of conversation. We should view this as its own opportunity for finance to lead the way.
Working for a vital, viable future
If given the proper focus, adaptation opens up a great many possibilities. Communities which have to relocate away from drought-stricken or flooded areas can be rebuilt more secure and sustainable than ever. Transport infrastructure can be reimagined, sometimes from scratch, to be more EV-friendly.
A lot of this is already happening, according to the UN. Farmers from Kenya to Bosnia and Herzegovina are diversifying crops. Vietnamese fishers are switching to beekeeping and El Salvador’s capital, San Salvador, is redesigning drainage to mimic natural water routes.
If the proper capital can be deployed to link these scattered efforts, adaptation can be made highly lucrative. The UN claims that $1.8 trillion of investment could see returns of $7.1 trillion, split between direct benefits and avoided costs. Early warning systems alone could pay for themselves tenfold. Who will reap those rewards?
Climate change is both now and our future. It will continue to radically alter our daily lives. If we take action today, we can adapt to these massive changes and give ourselves a head start for the best possible outcome. The alternative is to try, in vain, to hold back the rising tides. We all hope that climate change is slowed but hope is not a strategy.
This article is also published on the author's blog. Illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.
About the author
Ulrich Seitz is a climate impact investor and Managing Director of BayWa r.e. Energy Ventures.