January 22, 2025
Tracing our history to 1928, Wellington Management is one of the largest independent investment management firms in the world. We serve as a trusted adviser for institutions in more than 60 countries.
Climate adaptation may cost trillions. Is your portfolio ready?
Key points
- Spending on climate adaptation and protection from extreme weather events is projected to exceed mitigation spending, resulting in a larger investment opportunity set.
- The more the world delays or underfunds mitigating the low-carbon transition, the more money will be needed for climate and extreme weather resilience.
- Scientific evidence of accelerating climate change, inadequate climate impact modeling, and increasing health and safety risks are pulling forward the need for adaptation investments.
- Companies across a range of industries are innovating on solutions that help the world build resilience to chronic and acute climate and extreme weather risks.
Many large asset owners have begun to incorporate energy-transition risks and opportunities into their portfolio designs. Some have even developed proprietary frameworks for mitigating emissions. While this exposure may lead allocators to assume that the low-carbon transition comprises a larger investment opportunity set than climate adaptation and resilience to extreme weather events, there is compelling evidence to the contrary. In this paper, we explain why adaptation will likely cost much more than mitigation (and be even higher than current estimates), detail where spending will likely be highest, and suggest ways to invest in this growing opportunity.
More from Wellington Management
The most important insight of the day
Get the Harvest Daily Digest newsletter.