Global revenues from climate adaptation are set to grow from $1 trillion today to $4 trillion by 2050, while the investment opportunity could be worth as much as $9 trillion, a new study by GIC, in association with Bain & Company, has suggested.
Some $3 trillion of that total is set to be linked to global warming-driven adaptation needs, it states.
The asset management firm’s report, Sizing the Inevitable Investment Opportunity: Climate Adaptation, stated that the extent of the climate adaptation opportunity is largely resilient to different climate change pathways, with only a 4% variation across projections.
‘This suggests investors can build conviction in this space without needing to predict the precise climate pathway,’ the report notes.
Adaptation revenues
In addition, the report suggests that adaptation revenues by 2050 are expected to exceed historical trend-based forecasts by as much as 61%.
‘This upside surprise reflects the difficulty of translating climate science into long-term business implications,’ it adds. ‘Most financial planning and analysis (FP&A) teams and sell-side analysts continue to rely on historical data for forecasting. This information gap presents long-term investors with a unique opportunity to invest in a space where company earnings may positively surprise as demand for adaptation solutions increases.’
About the report
In compiling its report, GIC and Bain & Company assessed a variety of industry and scientific studies to identify the climate adaptation solutions most relevant to private sector investors. This research was then augmented by interviews with experts across a range of fields, including industry practitioners, climate scientists, insurers, and weather modellers.
With climate adaptation both fostering technological innovation and boosting the adoption of mature technologies, these dynamics will ‘create investment opportunities across traditional and emerging industries’, the report adds. Read more here.
