For years, climate investing has focused primarily on mitigation – reducing greenhouse gas emissions, accelerating the energy transition and addressing the root causes of climate change.
Those efforts remain critical.
But climate change is no longer a long-term scenario that businesses and investors can plan for someday. It’s reshaping how companies operate today.
Extreme weather events once considered rare are becoming more frequent and more severe, disrupting supply chains, damaging infrastructure and affecting employee productivity.
This summer, record-breaking heat waves across Europe¹ forced businesses to rethink cooling systems and workplace safety. In India, extreme heat has reduced productivity² and prompted employers to adjust work schedules and increase worker protections. And closer to home, we continue to face growing wildfire and flood risks, while rising insurance costs and shrinking coverage³ in high-risk regions are making climate resilience an increasingly important consideration for businesses and investors.
“These kinds of events and issues are way more prevalent now,” says Stephanie Tsui, Chief Sustainability Officer and Portfolio Manager at Genus. “And they are important factors that should be integrated into company strategic planning.”
For investors, they’re also a good reason to consider climate adaptation as part of portfolio resilience and long-term risk management.
What is climate adaptation investing?
Unlike climate change mitigation, which aims to slow or prevent further climate change, climate adaptation helps businesses and communities weather the impacts that are already occurring. “Adaptation is really the process of adjusting your assets or operations to lessen the impacts of climate change,” says Tsui.
Investing in climate adaptation could include strengthening energy or building infrastructure, diversifying supply chains, improving water security or making operations more resilient to extreme weather. “Resilience is the outcome of those solutions,” Tsui adds. “And companies that invest in resilience may be better positioned to access capital, manage insurance costs and reduce operational disruptions.”
Ultimately, the goal with climate adaptation is to create the ability to withstand climate-related disruptions – and recover more quickly when they occur. And it’s becoming more important than ever: estimates put climate-related losses at US$1.2 trillion annually⁴ by the 2050s if businesses fail to adapt.
The growing investment case for climate resilience
Despite the growing financial risks of climate change, climate adaptation remains underfunded, receiving less than 10%⁵ of global climate finance.
One reason is that adaptation is harder to define and measure than mitigation, which has benefited from well-established frameworks and measurable targets, such as reducing greenhouse gas emissions.
But the business case for investing in climate adaptation is becoming increasingly compelling: studies estimate that every dollar invested in climate adaptation can generate between $2 and $43 in economic returns⁶ through avoided losses, stronger operations and improved resilience.
For investors, this shift represents an important opportunity. Companies that are proactively assessing climate risks, strengthening resilience and developing adaptation solutions may be better prepared for a changing operating environment.
According to Tsui, there are three key questions investors should be asking.
- Where are the risks?
Not all companies face the same level of climate exposure. Physical risks vary depending on geographic location, the resilience of infrastructure, reliance on vulnerable supply chains and access to critical resources like water. Understanding these risks provides a clearer picture of where businesses may be most vulnerable to future disruptions. - How prepared is the company?
Exposure is only part of the equation. Investors should also assess what companies are doing to strengthen their resilience. That might include diversifying suppliers, investing in more robust infrastructure or incorporating climate risks into enterprise risk management strategies.
Tsui recommends that investors look beyond ESG ratings. Governance can provide important clues – for example, whether climate risk is integrated into enterprise risk management, whether there is board oversight of climate-related risks, and whether companies disclose adaptation strategies or investments in resilient infrastructure.
- Where are the investment opportunities?
Climate adaptation is also creating new areas for growth. Companies developing solutions for water management, grid modernization, climate risk analytics and resilient infrastructure are becoming increasingly important as governments and businesses invest in adapting to a changing climate.
Tsui points to water resilience as one area of particular interest. “Water is so essential to businesses and communities,” she says. “We’re seeing increasing demand for technologies that improve water quality, efficiency and the resilience of water systems.”
To that end, Genus’ High Impact Equity Fund includes companies such as Watts Water Technologies, which develops products that support water conservation, quality and infrastructure resilience, and MasTec, an infrastructure company helping to modernize and strengthen North America’s energy grid.*
For investors seeking to align their portfolios with environmental and social objectives, these types of businesses represent one potential way to participate in solutions addressing climate-related challenges.
But for any investment, Tsui says, climate risk should be evaluated alongside traditional financial analysis. “It’s not a separate issue from business performance,” Tsui says. “It’s increasingly connected to it.”
At Genus, our investment team combines ESG data with fundamental research to better understand how companies are managing climate risks in practice. “We don’t rely solely on ESG ratings,” Tsui says. “We look into what companies are actually doing.”
As physical climate risks accelerate, the question is no longer whether climate change will affect businesses. It’s how prepared they are to respond – and whether investors can recognize the companies turning resilience into long-term value.
Interested in learning how climate considerations may fit into your investment approach? Explore our impact investment services today.
References
- Rodriguez, C. (2026, July 14). Scorching, Record-Breaking heat waves across Europe in photos. Forbes. https://www.forbes.com/sites/ceciliarodriguez/2026/07/12/too-hot–scorching-recordbreaking-heatwaves-across-europe-in-photos/
Business Today. (2026, July 11). India could lose over 19 working days a year to extreme heat by 2030: Report – BusinessToday. https://www.businesstoday.in/latest/economy/story/india-could-lose-over-19-working-days-a-year-to-extreme-heat-by-2030-report-542370-2026-07-11
How governments and insurers can help lower soaring home insurance costs | Pembina Institute. (n.d.). Pembina Institute. https://www.pembina.org/blog/how-governments-insurers-can-help-lower-soaring-home-insurance-costs
Macfarland, M., Lord, R., & Linko, T. (2025, April 14). For the world’s largest companies, climate physical risks have a $1.2 trillion annual price tag by the 2050s. S&P Global. Retrieved July 15, 2026, from https://www.spglobal.com/market-intelligence/en/news-insights/research/for-the-worlds-largest-companies-climate-physical-risks-have-a-1-2-trillion-annual-price-tag-by-the-2050s?utm_source=chatgpt.com
Spalding, K. (2025, July 3). Investing in climate adaptation is no longer optional. It’s business-critical. Reuters. Retrieved July 15, 2026, from https://www.reuters.com/sustainability/sustainable-finance-reporting/investing-climate-adaptation-is-no-longer-optional-its-business-critical-2025-07-03/
- Spalding, K. (2025, July 3). Investing in climate adaptation is no longer optional. It’s business-critical. Reuters. Retrieved July 15, 2026, from https://www.reuters.com/sustainability/sustainable-finance-reporting/investing-climate-adaptation-is-no-longer-optional-its-business-critical-2025-07-03/
This document is provided for general information purposes only and is not a substitute for professional advice. It does not constitute investment, legal, accounting, tax, or other advice or recommendations, nor should it be relied upon as the basis for any decision. Readers should seek specific professional guidance before making financial or investment decisions. Certain information herein is based on third-party sources believed to be reliable, but its accuracy and completeness are not guaranteed. Past performance is not a guarantee of future results.
* Holdings mentioned are provided for illustrative purposes only and may change. They should not be considered investment recommendations or a complete list of holdings.
