AI-enabled compass to push investors towards climate adaptation
Towards a financial strategy to enhance climate adaptation
The need and urgency to develop solutions for climate adaptation has been repeated for years as a mantra by climate science and major international organizations. But the technologies, products and services that could allow us to be more resilient to the climate crisis have been virtually ignored by big investors. And without investment, their development at scale is slow. To reverse this trend comes an artificial intelligence-enabled tool to help large investment funds find the most promising companies.
This was presented by the non-profit organization Global Adaptation and Resilience Investment Group (GARI) in a report prepared with the support of Bezos Earth Fund (the climate fund of the patron of Amazon), ClimateWorks Foundation (philanthropic foundation supporting a wide range of initiatives, including direct CO2 capture from the air) and MSCI Sustainability Institute (branch of the US financial services provider).
Enhancing climate adaptation through finance
What is the GARI instrument for? In its current version, it identifies “a universe of over 800 listed companies in the resilience sector” and presents some methodologies that investors can use “to find these companies and incorporate climate resilience into the design of investment products”. A compass to guide investors towards solutions for climate adaptation and enhance their development.
Climate adaptation is presented, rather than as a cost to governments, as opportunities for profit and growth for industry. Among the sectors screened by the GARI tool there are solutions to make resilient electricity networks, rainwater management, new insurance products, but also vaccines (having regard to the expected increase in transmission of contagious diseases due to the climate crisis). The sector most represented among the 800 companies identified is the industrial sector (42%), followed by materials (16%) and consumer goods, ie those not of first necessity (8%).
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“The urgency of climate change has led to two intertwined investment opportunities: the transformation to a zero net emissions economy and the need to adapt to its impacts,” said Paul Bodnar of the Bezos Earth Fund. “If we treat adaptation as a dark subject for governments to worry about, we risk stifling the private-sector innovation urgently needed to stimulate creative solutions for the world’s most vulnerable populations – he adds – Just as financial markets have become a vital force for channelling capital to the decarbonisation, can do the same for companies that develop resilience technologies and services”.
