Overcoming Adversity: Investing in Climate Change Adaptation Strategies
In a recent study conducted by BCG, Temasek, and Ecosperity, key focus areas for investments in the climate adaptation and resilience space were identified. The study, titled "The Private Equity Opportunity in Climate Adaptation and Resilience," was published in May 2025.
The report highlights several sectors that address climate risks and adaptation needs, where trillions in funding are required. According to the study, the most attractive investment areas within the adaptation space include:
- Agriculture and Food Systems: Investments in climate-resilient food production are crucial to ensure food security in the face of changing climate conditions.
- Water Resource Management: Ensuring water security and resilience is vital for communities and industries alike. Investments in this area can help mitigate the impacts of droughts and floods.
- Waste Management and Circular Economy Solutions: As the world grapples with increasing waste, innovative solutions that promote sustainability and resource efficiency are in high demand.
- Clean and Renewable Energy Technologies: Transitioning to clean energy sources is essential for reducing greenhouse gas emissions and mitigating climate change.
- Materials Innovation for Sustainable Construction and Infrastructure: Sustainable materials can help build climate-resilient infrastructure that can withstand extreme weather events.
- Clean Transportation Adapting to Climate Impacts: Investments in clean transportation can help reduce carbon emissions and prepare for climate-related disruptions.
- Built Environment: Focusing on climate-resilient infrastructure can help cities and communities adapt to the impacts of climate change.
- Climate Data Analytics and Risk Mitigation Technologies: These technologies provide valuable insights for adaptation decision-making, helping to mitigate climate risks.
These focus areas align with Temasek’s sustainability portfolio and BCG’s analysis of where private capital can address urgent climate adaptation gaps, meeting the estimated trillions needed globally.
The study also indicates that climate change analytics companies, which provide data and solutions for adaptation risk mitigation, are experiencing strong annual revenue growth and healthy profit margins, making analytics and data-driven risk solutions attractive areas for investment within adaptation.
In a related development, the Global Landscape of Climate Finance 2024 report, released by CPI in October 2024, reported that global spending on climate adaptation more than doubled in the five years to 2022, reaching $76bn. This trend is expected to continue, with CPI forecasting up to 3x as much annual spend required by 2030.
The World Resources Institute estimates that every $1 spent on climate adaptation can yield over $10.50 in benefits across avoided losses and economic, social, and environmental benefits. This underscores the importance of investing in climate adaptation and resilience.
In the UK, where less than 5% of homes have air conditioning, investments in climate-resilient building materials and heating and cooling investments will be necessary to cope with more extreme temperatures. The UK experienced the hottest June on record this year, and the World Health Organisation estimates over 175,000 annual heat-related deaths in Europe alone over the 20 years to 2019.
It is important to note that this document contains forward-looking statements with respect to LPPI's future financial condition, performance results, strategic initiatives, and objectives. The document does not provide advice on legal, taxation, or investment matters and should not be relied upon for any such purpose. The document and its content are provided "as is" without any representation or warranty.
LPPI's Environmental Opportunities Fund includes climate adaptation as one of its three environmental objectives. LPPI is authorised and regulated by the Financial Conduct Authority. This document is proprietary and confidential and should not be shared without the prior written consent of Local Pensions Partnership Investments Ltd.
[1] BCG, Temasek, and Ecosperity. (2025). The Private Equity Opportunity in Climate Adaptation and Resilience. [2] CPI. (2024). The Global Landscape of Climate Finance 2024. [3] Temasek and BCG. (2023). Temasek-BCG Climate Adaptation Report. [4] BCG. (2025). The Rise of Climate Change Analytics.
- The report from BCG, Temasek, and Ecosperity published in May 2025, titled "The Private Equity Opportunity in Climate Adaptation and Resilience," reveals that the most attractive investment areas within the adaptation space include environmental-science sectors like climate-resilient food production and water resource management.
- The Global Landscape of Climate Finance 2024 report, released by CPI in October 2024, shows a significant increase in spending on climate adaptation, with annual spending expected to increase 3x by 2030. This trend highlights the need for investments in technologies like climate data analytics and risk mitigation, which have been experiencing strong growth.
- In line with this growing awareness, LPPI's Environmental Opportunities Fund, a regulation by the Financial Conduct Authority, includes climate adaptation as one of its three environmental objectives, signifying the importance of finance and investing in adapting to climate change.
