Adaptation Finance 'Plateauing', US National Resilience Strategy Launch, MSCI Buys First Street, and More

Plenty of companies say they’re managing climate risk. Far fewer are doing anything about it — and the market can tell the difference. Tobias Schimanski built the first large-scale, firm-level measure of climate adaptation, using fine-tuned language models to read every 10-K filing from 13,500+ US public companies between 2003 and 2025.

The result is the clearest picture yet of how companies prepare for physical climate risk, and how investors interpret this preparation.

Join us as we walk through the findings and what they mean for anyone investing in, operating within, or building for the Adaptation Economy.

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Adaptation finance stalled at US$64bn in 2024 — a fraction of what the world needs — while total climate flows crossed US$2 trillion for the first time, according to Climate Policy Initiative’s Global Landscape of Climate Finance 2026. 

The adaptation figure represents just 3% of total flows and carries a compound annual growth rate (CAGR) of only 6% since 2019, far below the 15% for mitigation finance. Least developed countries (LDCs) lost out the most: international public adaptation flows to these nations dropped 35% year-on-year, and government direct support reached its lowest nominal level since 2020. 

Multilateral Development Finance Institutions are bucking the broader stagnation, posting a 14% CAGR since 2019 and three consecutive years of growth, but private adaptation finance remains at US$3.8bn — a tracking and mobilization failure CPI attributes partly to outmoded and gappy classification methodologies that miss resilience-relevant private spending on cooling, storm-proofing, and climate-resilient construction. 

Total climate finance growth slowed to 6% in 2024 and is estimated at just 2.5% for 2025 — well below the sustained double-digit rates needed to reach even the US$6.2tn lower-bound annual investment threshold by 2035.

Sixty-one countries and eight regional groups — roughly 75 economies in all — have submitted expressions of interest to the Climate Investment Funds’ Arise program, a resilience-investment vehicle designed to help poor nations promote economic growth and guard their fiscal stability from climate shocks. The response covers 76% of the African continent and 73% of all least-developed countries. CIF is offering financing of around US$30mn to US$40mn per country and up to $50 million for regional programs, for up to five countries or regions. (Climate Investment Funds) 

Private Infrastructure Development Group (PIDG) is putting up US$6.4mn in first-loss catalytic capital to help BlackRock’s Global Infrastructure Partners mobilize some $750 million in private capital for climate-resilient infrastructure across emerging markets. The Infrastructure Resilience Development Fund (IRDF) is a blended finance structure, designed with the Insurance Development Forum, targeting projects in clean energy, water, transport, and digital infrastructure, with a mandate of widening natural catastrophe protection in developing economies. In addition, GuarantCo — PIDG’s guarantees arm — will backstop select investors with a US$35mn partial second-loss guarantee when the fund expires. The investment is subject to regulatory and investor approvals. (PIDG)

Fourteen large, richer emerging economies channeled an estimated US$102bn into climate action between 2013 and 2023, a new analysis from the World Resources Institute (WRI) finds. China, South Korea, India and Brazil accounted for 72% of that total, reflecting their economic heft and growing network of public finance institutions. While climate finance contributions from emerging economies are not factored into ‘official’ tallies of global capital mobilization under the UN Framework Convention on Climate Change, the WRI study shows that developing nations are already deploying vast amounts for mitigation and adaptation in the poorest countries. (WRI)

Analysis by ratings agency Moody’s concludes that credit risks from UK flooding remain contained for now, but flags a widening protection gap as private insurers retreat from the highest-risk postcodes. While the state-backed reinsurance scheme Flood Re is sustaining high levels of flood insurance across the country, in the 2024-2025 period 346,200 policies were ceded to the scheme from private carriers, up 20% year on year and the highest level since its founding. The scheme is due to close in 2039. Moody’s estimates that direct fiscal costs from a 1-in-100 year flood could reach 0.2% of GDP, doubling in rarer events. (Moody’s)

Spanish bank BBVA is repricing corporate loans based on clients’ physical climate risk exposure, starting with agriculture, real estate, leisure, utilities, and infrastructure, Elvira Calvo, head of sustainability business transformation, told Bloomberg. She added that the lender will expand this treatment to retail customers as data and modeling improve. The adjustments are currently modest but will be “progressively calibrated.” BBVA is using AI to fill data gaps on asset-level vulnerabilities such as building design and elevation. (Bloomberg)

Investor capital is charging into heating and cooling stocks at an accelerating pace, with HVAC companies posting gains of 17 to 70 percent this year as climate-driven heat extremes and the data center build-out reshape demand fundamentals, Financial Times analysis shows. Carrier Global’s market value has reached US$60bn, up one-third since the start of this year, while Comfort Systems USA has more than doubled to US$73bn on the back of its data center contracting. Europe — where air conditioning penetration remains far below US levels — is emerging as the sector’s next growth frontier: Tokyo-listed Daikin’s European sales grew nearly 10 percent in the year to March, faster than any other region. (Financial Times) 

The Global Shield against Climate Risks, a collaboration between a group of the wealthiest and the poorest countries in the world designed to strengthen disaster risk financing and insurance, has sealed a partnership with the Insurance Development Forum (IDF) aimed at building out local insurance markets in climate-vulnerable countries. The deal will connect IDF’s industry members with Global Shield partner-country requests for risk-transfer expertise, while supporting the risk analytics and supervisory architecture that developing country insurers need to grow sustainably. (Global Shield Against Climate Risks) 

Bloomberg Philanthropies is committing $260mn for ocean protection, with a focus on helping partner countries establish protected marine areas and support the global goal of protecting 30% of the ocean by 2030. The financing will also help small island and coastal nations engage with global ocean negotiation through technical, legal, and policy support. Only around 10% of the world’s oceans are currently protected against a 30%-by-2030 target. (Bloomberg Philanthropies)

Singaporean bank DBS and non-profit the Climate Bonds Initiative have published a framework to help lenders and businesses identify and finance worthy climate adaptation projects across Asia-Pacific, where physical climate risks could cost companies with major Asian operations US$336bn annually by the 2030s. “Adaptation and Resilience: Exploring Investable Opportunities in Asia-Pacific” maps investable opportunities across four sectors, including Indian commercial real estate facing heat stress and Singapore-Malaysia data centers constrained by water scarcity. DBS will next train relationship managers to embed resilience assessment into client lending. (DBS)

UNEP FI has published an Adaptation Finance Taxonomy Playbook, giving financial institutions a hands-on toolkit for classifying adaptation investments across jurisdictions where existing categorization systems have gaps or inconsistencies. The report finds that while 61 national sustainable investment taxonomies include adaptation as an objective, not all have explicit criteria for determining whether investments make a substantial contribution to adaptation or climate resilience. A survey of 17 public and private financial institutions conducted for the playbook found that 27% believe the limited availability of local climate risk data frustrates the use of adaptation taxonomies in their home markets, while 25% said difficulties quantifying adaptation outcomes were to blame. (UNEP FI)

The White House issued a National Resilience Strategy last Tuesday that pares back the federal government’s role as the nation’s default disaster insurer, shifting financial and operational liability to states, localities, industry, and households.

The document discards the all-hazards model underpinning past US emergency policy, directing agencies to instead quantify risk on “realistic assessments rather than extreme, speculative, or fantastical scenarios.” The word ‘climate’ does not appear in the strategy at all. ‘Weather’ features only once, in relation to ‘space weather’ — solar activity that can disrupt technology and satellite operations on Earth. 

The strategy overhauls how federal grants and investments for disaster risk reduction are distributed, introducing return on investment metrics that would see Washington issue aid only when disruptions exceed states’ means. “[F]or too long, many states have relied excessively on federal grants and other assistance to manage known, predictable, or recurring disruptions with federal tax dollars subsidizing and overcompensating for the lack of state or local resilience,” it reads. A new National Risk Register will steer investment to programs and technologies that bolster the country’s resilience.

It further calls on states and localities to foster their own “professional emergency management staff and first responders” while upgrading early-warning systems and public risk communications. For industry, the strategy says it “must enable their own success by integrating resilience by default, not by exception.”

It would also cut “redundant advisory bodies” and revise risk-assessment requirements, though the strategy does not specify which bodies or requirements. There are no direct references to existing federal agencies, like the Federal Emergency Management Agency, in the document.

The release of the strategy fulfills an executive order issued by President Trump in March 2025, which called for a strategy that “articulates the priorities, means, and ways to advance the resilience of the Nation.” The order stated that the strategy should have been released by June 16 of last year.

Gregg Phillips, the Trump administration official overseeing the Federal Emergency Management Agency’s (FEMA) largest division, has gone on leave, triggering another leadership change at an agency central to US disaster response. David Arnold, a senior official who left the agency earlier this year, steps in as acting associate administrator for the Office of Response and Recovery, which manages more than 1,000 employees and a US$300mn budget covering hurricane, flood, and wildfire response. (New York Times)

New York City Mayor Zohran Mamdani signed an executive order last Monday requiring city agencies to develop heat illness prevention plans for municipal workers and mandating the Department of Health produce guidance for all outdoor and indoor workers by March 2027. The order covers more than 1.4 million outdoor workers, roughly a third of the city’s workforce. The Department of Buildings must also review whether construction safety requirements adequately protect against heat illness, with recommendations due March 2027. (NYC Mayor)

UN Secretary-General António Guterres used his London Climate Action Week address to press finance ministers directly, arguing climate risk needs to sit inside fiscal and monetary policy-making rather than stay parked in environment ministries. “Adaptation must be built into national planning and decision-making — from development strategies to regulation. We need more effective insurance and risk-sharing systems. We need contingency systems that can act before shocks become humanitarian and economic catastrophes. We need better preparation before disaster strikes and to fully implement our Early Warnings for All Initiative,” he said. (UN)

London’s first-ever heat plan, Heat Ready London, landed last week as the UK record for the hottest day in June was broken three days in a row, with temperatures averaging 33°C in the capital on June 23. The strategy spans six areas — built environment, business and economy, emergency preparedness, resilience and response, health and care, green space, and nature and infrastructure. The plan highlights analysis showing one million London homes are at high risk of overheating, along with more than 1,300 schools, 60 hospitals, and 351 care homes. Priorities under the plan include retrofitting buildings, expanding cooling spaces and protecting those most vulnerable to heat stress. (London City Hall)

The UK government has released a new Farming Roadmap, its long-term strategy for transitioning England’s agricultural sector toward climate resilience and food security out to 2050. The plan commits to scaling Environmental Land Management scheme funding from £800mn (US$1bn) in 2023 to £2bn ($2.6bn) annually by 2029, covering 69% of farmed land, while targeting at least £300mn (US$397mn) in natural flood management investment by 2036. The roadmap also earmarks funding for peatland restoration and forestry to enhance their natural climate resilient properties. (UK Government)

MSCI will acquire First Street, a physics-based climate risk analytics provider, for US$120mn in cash, with additional payments possible over the following two years if revenue targets are met. 

The deal, expected to close in the third quarter of 2026, adds First Street’s property-level physical risk data into MSCI’s climate and geospatial tools, spanning more than 2 billion structures worldwide. First Street’s results will report within MSCI’s Sustainability and Climate segment, which earned US$91.9mn in the first quarter and almost US$354mn across 2025.

“Once complete, this acquisition will expand our existing physical risk and geospatial capabilities, helping institutional investors, financial institutions and corporates translate physical hazards into measurable financial impact and embed that view directly into the decisions they make every day,” wrote Lisa Eichler, Head of Physical Risk and Nature Solutions at MSCI, on LinkedIn. 

The acquisition targets banks, insurers, and asset managers confronting tighter disclosure rules and accelerating climate hazards. The company’s research found firms are 6.5 times likelier to issue profit warnings after extreme weather than two decades ago. European central banks already use MSCI data to map climate risk across loan books.

First Street raised US$55.5mn in 2024 from Congruent Ventures, Galvanize, and General Catalyst. For its backers, MSCI’s client base is the prize: “The thing we needed the most at First Street to really blow it out and make it a multi-billion-dollar business was access to customers,” said Joshua Posamentier, Co-Founder and Managing Partner at Congruent Ventures. “MSCI literally has like 100% of the people as clients that we'd want.”

The deal signals how far physical risk analytics have moved into financial decision-making. “It seems like adaptation and resilience are going from niche, to mainstream, to perhaps heading towards a dominant force in financial risk management,” said Jeff Schlegelmilch, Associate Professor of Practice in Climate at Columbia Climate School.

Former scientists from the National Oceanic and Atmospheric Administration (NOAA) have launched Climate.us, an independent non-profit, to preserve public access to science-reviewed climate information. The platform, built by the team behind the federal government’s Climate.gov – which has been mothballed by the Trump administration – restores access to that site's 15-year archive, expert blogs, climate indicator dashboards, and the Fifth National Climate Assessment. More than 2,500 small donors contributed roughly US$250,000 toward the launch. (Climate.us) 

The UK’s Foreign Office and Met Office unveiled an AI-based weather-forecasting partnership at London Climate Action Week, aimed at improving extreme weather warning capabilities across Africa, the Middle East, and the Indo-Pacific. Initial efforts are to be focused on improving forecasting in the Philippines, which is especially vulnerable to worsening typhoons because of its densely populated coast. (UK Government)

Singapore-based H3 Zoom closed a US$3.6mn Series A round to scale its AI-powered infrastructure inspection tech across Asia, led by East Japan Railway Company’s venture arm JRE Ventures. The platform combines computer vision, drone-based data capture, and proprietary vision-language models to replace manual building and infrastructure inspections with structured, traceable asset intelligence. (H3 Zoom)

A favorite cooling approach for data centers is losing its edge, according to a new study in Scientific Reports. The analysis finds that “direct air free cooling” — where outside air is pulled straight into server halls to dump heat without chillers or refrigerants — is becoming unreliable as the climate warms. Atmospheric scientist Christina Karamperidou of the University of Hawaiʻi at Mānoa and colleagues combined 45 years of hourly weather data with climate projections and found that hours too hot and humid for free cooling are climbing fastest in the tropics and the southeastern US, with extreme “worst-day” conditions intensifying faster than seasonal averages. (Scientific Reports) 

Fossil fuel emissions have rapidly worsened European heatwaves in just a few decades (World Weather Attribution)

Global heat stress intensification and its expanding footprint on the human population (Nature Climate Change)

Comprehensive national climate damage assessments framework applied to the UK (Nature Climate Change)

Mental health as both outcome and determinant in climate adaptation (Nature Climate Change)

Improving economic impact assessment of climate change with machine learning (Nature Communications)

Genetic technologies to enhance crop nutritional value under climate change (Nature)

Reframing risk assessment for malaria elimination in a changing climate (Nature Reviews Microbiology)

Systematic review on climate-smart agriculture in Ethiopia: evidence on resilience and food security outcomes (Mitigation and Adaptation Strategies for Global Change)

Predicting the flood susceptibility under land use and climate change scenarios using deep learning algorithms (Scientific Reports)

Compound dry-and-hot extremes exacerbate income inequality and poverty in Europe (Global Environmental Change)

Climate-adjusted probability of default model: A framework for integrating physical climate risk for residential mortgage (Sustainable Futures)

Thanks for reading!

Louie Woodall
Editor