122 - The emergence of climate adaptation investment funds

Rising urgency

Author

The Climate Mentor
March 26th, 2025 • Estimated Reading Time: 4 minutes

Adapting to a changing financial climate ♻️

As climate change becomes an undeniable reality, countries and companies alike are adjusting their focus.

While mitigation — efforts to reduce emissions — continues to be crucial, adaptation has emerged as a pressing need.

The impacts of rising sea levels, extreme weather events, and shifting agricultural conditions are already being felt globally.

In response, climate adaptation investment funds are gaining momentum as they target early-stage companies and projects that help communities and industries adapt to these challenges.

A bar chart showing the thematic split of climate finance provided and mobilized between 2016 and 2020. The chart differentiates between adaptation, cross-cutting, and mitigation finance, with values ranging from $42.2 billion in 2016 to $48.6 billion in 2020. The chart highlights the growing share of funds allocated to mitigation and adaptation strategies over the years.

Thematic Split of Climate Finance Provided and Mobilized (USD Billion)

The growth of adaptation focused funds 🌱

A notable example of this shift is the Mazarine Climate Fund, which is seeking to raise $25 million to support early-stage companies addressing climate-induced water risks, particularly those related to water scarcity and flooding.

A Venn diagram comparing climate change mitigation and adaptation strategies. The diagram shows various innovations under each category, such as low-carbon transportation, waste reduction, renewable energy, and energy-efficient buildings in the mitigation section, while adaptation includes innovations addressing water scarcity, flooding, sea-level rise, and compromised water quality. The intersection highlights technologies and strategies that contribute to both mitigation and adaptation efforts.

Mazarine’s Climate-Tech Taxonomy

This fund aims to invest in solutions that build resilience against the immediate effects of climate change — from innovations in water management technologies to new agricultural practices that can withstand more extreme conditions.

Additionally, major investment firms like Invesco are also turning their attention to adaptation, with plans to raise $500 million for its Climate Adaptation Action Fund. This fund, which has already secured $200 million in commitments, will focus on projects that provide resilience-building solutions for both large-scale infrastructure and vulnerable communities. The fund targets sectors including water, infrastructure, and renewable energy solutions that can adapt to the changing climate.

Invesco's Climate Adaptation Action Fund demonstrates a growing interest in making climate adaptation a viable investment strategy, as the need for these solutions becomes increasingly urgent.

Investors!

The rise of climate adaptation funds presents significant opportunities for investors.

As climate impacts are expected to intensify, the market for resilient solutions will continue to grow. Funds that focus on climate adaptation provide a pathway for investors to support projects that not only help communities but also create long-term value through innovation in critical sectors.

Investors should consider diversifying their portfolios by including these emerging funds that address climate risks head-on.

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