Resilience: the next phase of climate strategy
Why active investors should focus on climate resilience.
Duration: 2 Mins
Date: 23 Jun 2026
Why invest in climate resilience now?
Our changing climate is no longer a distant, long-term concern. Acute shocks are already materialising, while chronic risks are set to compound over the coming decades. This is reshaping economic and financial outcomes:
- Rising disruption costs and tightening insurance capacity are pulling private capital and risk‑management solutions into adaptation.
- Physical climate risks remain structurally mispriced, as markets rely on backward‑looking data that understates future extremes.
- Private capital still accounts for a small share of adaptation finance, leaving a wide financing gap and significant scope for investment.
Market understanding is still evolving, both in terms of how physical climate risks are incorporated into investment decisions and how issuers define, measure, and disclose resilience. Data remains limited and inconsistent. But taxonomies and useful investment frameworks – such as the IIGCC’s Climate Resilience Investment Framework and the Climate Bond Initiative’s Climate Bonds Resilience Taxonomy – are beginning to emerge.
Together, these dynamics are moving adaptation and resilience from a conceptual risk to a more defined and investable opportunity.
Three routes to resilience
The investable universe for ‘pure-play’ adaptation remains relatively narrow, but a broader resilience lens expands the opportunities across sectors. A practical framework helps translate physical climate risk into portfolio decisions by showing where resilience can drive growth, help cash flows or improve downside protection. In practice, the most compelling opportunities are often found across three overlapping categories.
Adaptation solutions
These are companies whose products or services directly reduce exposure or vulnerability to physical climate risks. Examples include water efficiency, drought and heat-tolerant agriculture, resilient materials and components, and climate-risk analytics and insurance.
The strongest candidates typically show identifiable adaptation-linked revenues, credible demand drivers and clear evidence that they help customers manage material climate hazards in ways that are scalable and commercially durable.
For investors, the key is to distinguish between businesses with genuine adaptation relevance and those with only loose thematic exposure.
Resilience builders
This category includes core infrastructure and essential services that strengthen system-wide resilience in exposed regions, such as utilities, transport, communications, healthcare, and food systems.
For investors, the focus should be on unmet needs, credible plans to manage physical risks and to ensure long-term system reliability, and supportive policy settings. This category should also support resilience for communities, critical services, and supply chains.
Resilience builders can meaningfully broaden the investable universe without requiring a move into entirely new sectors. These businesses also often sit at the overlap of mitigation and adaptation.
Adaptation leaders
These are companies that manage their own physical climate risks particularly well, even if adaptation is not their core business. Leadership shows up through credible resilience strategies supported by capital allocation, stronger operational resilience, and better supply-chain management. This may support lower drawdowns, steadier cash flows, and faster recovery after shocks – especially in sectors with exposed assets, vulnerable workforces or climate-sensitive supply chains. In these situations, resilience can become a meaningful source of competitive advantage.
In this category, resilience may show up less as a growth theme and more as a quality and downside-protection characteristic.
Combined, these three categories broaden the opportunities beyond narrow adaptation and offer a more useful way to identify resilience across portfolios. In this context, resilience is not just a thematic consideration, but a portfolio construction tool, helping to reduce downside risk, improve cash flow visibility, and identify structural growth opportunities not yet reflected in current valuations.
Why active management has an edge
Adaptation isn’t a passive theme. Disclosures remain uneven, resilience is difficult to infer from reported data, and outcomes are highly company-specific and execution-driven. Identifying differentiated opportunities therefore requires active research, robust classification, and ongoing engagement – particularly to assess unmet needs, materiality, potential negative externalities, and critical supply chain dependencies.
Two implications follow:
- Physical climate impacts are accelerating faster than they’re being reflected in asset prices. As forward-looking risks begin to materialise, pricing is likely to adjust – potentially quickly and unevenly across sectors and regions.
- Active investors are better positioned to identify and capture resilience. With inconsistent disclosures and a wide dispersion in outcomes, passive exposures risk embedding unrecognised physical risks. Meanwhile, active approaches can identify resilience leaders and emerging opportunities.
Final thoughts…
Climate resilience represents a structurally growing but still under-recognised opportunity. With imperfect data and a wide dispersion of outcomes, we believe that active management and stewardship are well placed to identify and capture resilience more effectively over time.
