The Coalition for Climate Resilient Investment (CCRI) has worked with consultancy Mott MacDonald to create a guide designed to encourage investment in the resilience of infrastructure, exploring how infrastructure is exposed to climate risk.
- New guide to resilient infrastructure returns could help redirect capital flows.
- There is “huge appetite” to invest in adaptation but until now the private sector has not had the right tools to navigate it.
- Making infrastructure more resilient will improve performance, reduce maintenance and limit negative impacts on the communities around it.
The newly launched guide encourages a focus on resilience through making the case for ‘resilience dividends’ – proving the positive financial return associated with resilient infrastructure.
Such an approach supports the growing focus on the importance of adaptation. To date climate finance has predominantly funded mitigation projects and investments, rather than exploring the potential long term benefits of adaptation. Investment in adaptation remains far smaller than investment in emissions reduction and that is something that needs to change.
Investing in resilience has multiple positive benefits
Denise Bower, executive director at Mott MacDonald, said: “Investing in resilience leads to better outcomes, better performance, less downtime, less maintenance and, most importantly, fewer negative impacts on the communities that infrastructure serves.
“All of this means a higher rate of return for investors and is a powerful tool for building the case for resilience. This is vitally important work. Even if we do manage to limit global warming to 1.5°C, we will still see decades of continued changes to our climate that will result in immense economic shocks and loss of life if we are not prepared.”
The Physical Climate Risk Assessment Methodology (PCRAM) demonstrates how investing in adaptation leads to positive financial returns, or ‘resilience dividends’, to encourage companies, governments and investors to step up their efforts.
Mott MacDonald and the CCRI said that long term they are planning to create a League of Investment Funds for Resilience, which would be a group of asset managers committed to using PCRAM.
Adaptation gap must be addressed for long term sustainability
According to a study on climate finance by the Climate Policy Initiative, a US non-profit research group, only $46 billion globally were allocated to adaptation and resilience between 2019 and 2020. In comparison, $571 billion was spent on mitigation.
Researchers warn that the amount spent on adaptation today is not enough to supply the needs of countries and companies at risk from climate change. In its 2021 Adaptation Gap report the UN warned that costs could reach $280–500 billion a year by 2050.
Carlos Sanchez, executive director of the CCRI, said there is “huge appetite” from the private sector to invest in adaptation but it has so far lacked the tools to navigate it.
The CCRI was established in 2019 and has over 120 members across the construction, insurance, legal and several other industries, who collectively represent $20 trillion of assets.