- A newly-released report from Adaptation Leader focuses on the lack of attention to climate adaptation and resilience as a critical component of climate action and environmental, social, and governance (ESG) investment strategies.
In the run-up to COP27 the report Climate Change Adaptation – ESG Investing’s Most Important Missing Piece? posits that the adaptation side of climate action – the effective management of emerging risks and corresponding business opportunities of a changing climate – remains a significant ESG challenge for the investment community and financial sectors.
While climate adaptation is gaining attention as a complementary strategy to climate mitigation, Peter Soyka and Ira Feldman, authors of the report, point to an adaptation and resilience gap in the context of ESG and climate disclosure. “There remains a huge disparity between mitigation and adaptation in terms of awareness, available finance, and metrics to measure implementation success,” explained Feldman, founder and managing director of Adaptation Leader.
The report emphasizes the need for new ways of thinking in the private sector to facilitate the development and implementation of adaptation strategies and policies that holistically address climate risks. Such approaches will include a commitment to public-private partnerships and the prioritization of inclusivity, collaboration, and innovation.
See related article: Lightsmith Raises $186 Million for First Private Equity Fund Focused on Climate Resilience & Adaptation
“We see little evidence that current capital investment decisions reflect an understanding of how the changing climate poses severe risks to typical business activities and to society. This must change,” emphasized Soyka, an Adaptation Leader board member.
Examining the role of corporations, institutional investors, and insurers in the ESG space, the report offers pragmatic strategies for meaningful, effective approaches to address and manage business risks and societal impacts resulting from climate change. Soyka added, “Institutional investors and data providers alike can play a vital, catalytic role in increasing awareness of and urging action on climate adaptation. We call on the players in the ESG community to step up their game on adaptation and resilience, as they have on the mitigation side of climate.”
Adaptation Leader’s Special Report follows the extensive comments the organization submitted to the U.S. Securities & Exchange Commission (SEC) imploring SEC staff to enhance provisions relating to adaptation and resilience in the agency’s proposed climate risk disclosure rule.
Feldman noted, “significant changes to the reporting requirements in the proposed rule are needed to ensure that adaptation receives attention (from both disclosing companies and investors) commensurate with that focused on GHG mitigation.”
Adaptation Leader invites interested stakeholders to join its efforts in setting the climate adaptation research and policy agenda and developing innovative approaches and tools for adaptation and resilience solutions.
Source: Adaptation Leader