Global investment manager Schroders announced the launch of its Climate Adaptation Investment Framework, a new tool aimed at enabling investors to assess the economic and investment opportunities across more than 100 climate adaptation activities.
According to Schroders, the launch of the new framework comes as businesses and governments direct greater attention to adapting to physical climate impacts, through actions ranging from strengthening infrastructure against floods and extreme weather to investing in resilient buildings, citing BCG research indicating that annual demand for climate adaptation and resilience solutions could reach as high as $1.3 trillion by 2030. Schroders said that the new framework will help investors navigate this market, noting that not all climate adaptation spending will necessarily translate into viable investment opportunities.
Marina Severinovsky, Head of Sustainability, North America at Schroders, said:
“Investors have traditionally viewed the physical impacts of climate change primarily as a risk to their portfolios, but there is another side to that equation. Climate adaptation is increasingly becoming an economic and investment consideration in its own right, as businesses, governments and communities respond to a changing physical environment. Our aim with this framework is to give investors a clearer lens through which to understand how those changes could shape investment outcomes over time.”
Developed by Schroders in collaboration with the California Public Employees’ Retirement System (CalPERS), one of the largest public pension funds in the U.S., the new framework aims to provide a consistent way to compare the economic benefits of a range of actions and solutions that address the growing demand for infrastructure, technology, products and services that build resilience to physical climate impacts.
The new framework evaluates 102 climate adaptation activities to assess their economic and investment potential, across areas spanning infrastructure, technology, products and services, and is designed to distinguish between where adaptation can create significant economic value and where investors may actually be able to capture that value through durable business models and cash flows. Schroders added that the framework can also be used to assess existing portfolios and provide a more concrete basis for engagement with companies around physical climate risk and resilience.
Nelson Da Conceicao, Sustainable Investments Director, CalPERS, said:
“The need to build resilience is clear and growing. Not all adaptation solutions are investable on purely commercial grounds today; however, the framework Schroders has developed gives asset owners and investors a practical way to assess, compare, and prioritize investments. We hope it encourages productive conversations that strengthen portfolio and economic resilience.”
