European Corporate Adaptation Plans Lack Depth, FEMA'S $1bn for Disaster Resilience Grants, Climative's New Platform, and More

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Perhaps I should have become a semantician — someone who studies meaning in language. The amount of time I spend thinking about how we talk about climate adaptation can’t be healthy for a non-specialist. And yet I do so because the way adaptation is framed matters, and could determine the degree to which it is either embraced or overlooked by the stakeholders we need to climate-proof our societies. 

This week, I've been thinking about the language of adaptation in connection with the financial industry — specifically, how investment in adaptation is being positioned by some parties as a ‘hedge’ against worsening climate shocks, or as analogous to a ‘put option’. For those not fluent in financial geekery, a put option is a financial contract that gives the owner the right to sell a given asset at a predetermined price — regardless of the current market value of that asset. In trader parlance, they’re sometimes called “crash insurance”, since they’re supposed to put a floor on an investor’s losses if the stock market tanks. 

This framing, I think, offers a warped view of what adaptation can actually deliver. For one thing, adaptation cannot promise to cap investor losses the way a put option does. Take a manufacturing company that invests in flood defenses around a business-critical factory: the investment reduces flood risk, but it does not eliminate it. Within a certain range of flood scenarios, yes — damage to the asset could be curtailed, limiting impairment. But adaptation has a ceiling. A truly massive flood, far out on the tail of the statistical distribution, could overwhelm those defenses and render the factory inoperable. It’s the equivalent of a put option that protects against a 10% market plunge while leaving you fully exposed if it drops 20%.

For another, it categorizes adaptation purely as a defensive play, rather than a bullish investment in its own right. My belief is that we’ve overindexed on pushing adaptation as a downside protection play (see my recent article bemoaning the “$1 of investment saves/yields $X in avoided losses/benefits” framing of think-tanks and consultancies) and should reframe it as a revenue generating and capital appreciation strategy in its own right. Indeed, it’s notable that several recent venture investments are in adaptech companies that are meeting existing demand for new goods and services that are attractive in our climate-adjusted world — not not just shoring up legacy products and business models.

What I will concede to the ‘adaptation-as-put-option’ crowd is this: that increased climate volatility and uncertainty could increase the market value of adaptation investments. Indeed, the greater incidence of billion-dollar-plus extreme weather events in the US appears to be at least one catalyst for the latest wave of interest in adaptation among financial institutions and climate risk intelligence vendors. However, even in this respect the analogy has its limits. If climate risk becomes essentially binary — either completely destructive to an investment or entirely irrelevant — it may be economically rational to ignore it altogether. This is a point Aswath Damodaran — Professor of Finance at the Stern School of Business at NYU – has made: “Building in adaptability and safeguards against catastrophic risk makes sense only if the costs of doing so are less than the potential benefits.”

In a world where either the worst happens or nothing does, paying to do nothing may be the rational choice.

Louie Woodall
Editor, Climate Proof

Leading European companies are better prepared for worsening physical climate hazards than their global peers, but adaptation planning remains “nascent” across the board, S&P Global Ratings said in a report published last Tuesday.

The ratings agency found that 84% of 70 investment-grade European companies it surveyed disclosed climate adaptation and resilience plans — roughly double the 40% cross-sector average for both European and global companies — yet none demonstrated the most advanced planning components, such as adaptation targets, monitoring frameworks, or metrics to track progress.

Climate hazard exposure across the sample is projected to rise about 23% from the 2020s to the 2050s under a slow-transition scenario, with drought and water stress driving most of the increase. Southern European assets face the steepest water-related risks, while flooding from extreme rainfall dominates in the north and west. While no S&P rating action on a European corporate has been driven by physical climate risk to date, the agency warned that link could tighten as hazards intensify.

Across the sample, while most companies are incorporating climate scenario analysis into their financial planning, only around a quarter are estimating the cost of adaptation measures and just 16% have begun implementation on average. The chemicals sector stands out: all seven rated companies disclosed adaptation plans, with 86% using advanced quantitative risk assessment methods. Real estate companies show the highest disclosure rate but are the least likely to act within a decade, with only 19% targeting implementation in the next 10 years, compared with 45% across all European companies with plans.

No S&P rating action on a European corporate has been driven by physical climate risk to date, though the agency cautioned that link could tighten as hazards intensify.

Back-to-back Kona Storms that struck Hawaii between March 10-24 will inflict total economic and insured losses of at least US$1bn, according to Aon’s weekly catastrophe report, citing state officials. The barrage of rain-heavy storms delivered the heaviest rainfall Hawaii has seen since 2004, with some O'ahu locations recording nearly a foot of rain overnight on March 19-20. Agricultural damage alone is projected to exceed US$9.4mn, with O'ahu accounting for US$2.7mn. (Reinsurance News)

UK bank Standard Chartered and agribusiness COFCO International have closed a US$435mn sustainability-linked revolving credit facility tied to adaptation and social performance targets — the first publicly disclosed deal of its kind in South American agriculture. The loan links COFCO International’s borrowing margins to two externally verified indicators: volumes of grains and oilseeds certified under responsible agriculture standards, and the strength of supplier due diligence and labor safeguards in Brazilian soy and corn supply chains. The structure marks a departure from conventional sustainability-linked lending, which has largely centered on emissions reduction. (Standard Chartered)

Rebuilding Los Angeles homes destroyed by the January 2025 Palisades and Eaton fires to the wildfire-resilient standard developed by the Insurance Institute for Business and Home Safety would cut average annual losses by 31–35%, according to a first-of-its-kind analysis from the California Department of Insurance and the National Association of Insurance Commissioners. The study, which used Moody's wildfire catastrophe model, is the first to quantify how community-wide adoption of resilient building and landscaping standards affects Average Annual Loss — the metric insurers rely on when deciding whether to write policies in high-risk areas. (California Department of Insurance)

Hail has emerged as a primary extreme weather risk in the US, with 43.5 million properties now carrying moderate or greater hail exposure representing US$17.84tn in reconstruction cost value, according to Cotality’s 2026 Severe Convective Storm Risk Report. The US recorded 142 days of damaging hail in 2025 — seven more than the prior year and well above the 20-year average of 122 — with hailstones two inches or larger striking more than 600,000 homes worth roughly US$177bn in reconstruction value. At a 1-in-500-year loss scenario, hail alone could drive approximately US$58bn of an estimated US$71bn in total severe convective storm insured losses; even a once-every-few-decades event could produce nearly US$30bn in insured losses, on par with a major landfalling hurricane. (Cotality)

Australia’s financial watchdog warns the findings of a climate stress test suggest that around one in four of the country’s homes could go uninsured by 2050, up from one in seven today. The Australian Prudential Regulation Authority ran two scenarios — one modeling higher physical climate risk, one modeling transition risk — finding both drive significant premium increases through different channels: in the physical risk scenario, annual weather-related losses climb from A$7bn (US$4.8bn) to more than A$16bn (US$11bn); in the transition scenario, construction cost inflation is the primary driver. (Australian Prudential Regulation Authority)

Lagos State in Nigeria has activated a parametric flood-risk insurance policy covering up to four million residents and providing as much as US$7.5mn for flood response and recovery — the first such sovereign instrument placed in the country’s domestic insurance market. Designed by AXA Climate, AXA Mansard, Swiss Re, flood modeler JBA Risk Management, satellite firm ICEYE, and African Risk Capacity, the product triggers automatic payouts to seven local government areas, funding emergency relief and direct cash transfers without requiring loss assessment. (Insurance Development Forum)

Vitamin°C, a new climate-focused venture firm with offices in Zurich and San Francisco, has secured €18mn (US$20mn) in a first close for targeting pre-seed and seed investments across energy, food and agriculture, carbon removal, and human adaptation. (Vitamin°C)

The Federal Emergency Management Agency (FEMA) reopened its Building Resilient Infrastructure and Communities (BRIC) grant program last Wednesday, making US$1bn available to states, local governments, territories, and Tribal Nations for disaster-resilient construction.

The announcement follows a district judge’s ruling that the Trump administration’s April 2025 cancellation of the program was unlawful, and an order to set an explicit timeline for its restoration.

Said Karen Evans, the Senior Official Performing the Duties of the FEMA Administrator: “For this new funding opportunity, FEMA has reduced bureaucratic hurdles, focused funding on major infrastructure projects and shifted responsibilities to the states, reducing federal overreach. We are confident that this new and improved BRIC program will deliver results and make America safer.”

The restructured program concentrates capital on shovel-ready infrastructure. Of the US$1bn on offer, US$757mn is earmarked for a national competition, with separate set-asides of US$112mn for states and territories, US$50mn for Tribal Nations, and US$81mn for building code adoption and enforcement. FEMA stripped out hazard mitigation planning grants and non-financial technical assistance, narrowing eligibility to construction-ready projects and pushing more responsibility to state and territorial governments.

Over BRIC’s lifetime, FEMA received applications for more than US$15.6bn in work and committed roughly US$4.6bn — about 30% of demand — leaving a large queue of unfunded projects. Many previously awarded projects stalled when the program was abruptly terminated last year.

The restoration of the grants comes as the White House extended the lifespan of its FEMA Review Council through May 29. The panel, first established in January 2025 to assess FEMA's structure and operations, had already received one extension before this second continuance. The announcement signals the administration's restructuring review remains unresolved, with implications for how federal disaster response and resilience funding flows to states and municipalities.

The European Commission launched a wildfire risk management strategy last Tuesday, committing to expand its rescEU aerial fleet and establish a regional training and operations hub in Cyprus. The Commission will also develop new pan-European risk modeling capabilities and AI-assisted decision-making tools, backed by Copernicus satellite data. Prevention measures center on ecosystem restoration and fire-resilient landscape planning, with updated risk assessment guidelines for member states to integrate into national reporting. (European Commission)

A suppressed UK government report warns Britain’s food system faces "catastrophic failure" by 2030. The report, completed in 2024 by the Department for Environment, Food and Rural Affairs, claims that food, water and natural ecosystems are “almost certain” to be on a “decline and collapse trajectory” driven by climate change, habitat loss, and geopolitical instability. (The Times)

France’s development agency, AFD, has signed a partnership with the University of Exeter to strengthen macroeconomic analytical tools for finance ministries in the Global South, filling a yawning gap in climate-economic modeling capacity for the countries least equipped to absorb climate shocks. The collaboration will connect Exeter’s climate-economic models with AFD's network across more than 160 countries. (University of Exeter)

Climative has launched a platform that helps insurance companies share climate risk information with homeowners and guide them toward practical fixes. 

The US and Canadian firm’s tool gives insurers address-level hazard ratings and portfolio analytics, while also generating property-specific upgrade plans for individual policyholders. Those plans are designed to temper climate exposure using savings from energy cost upgrades that Climative can also facilitate, making the retrofits easier to afford.

Climative built its underlying technology for banks, utilities, and government programs, deploying it across Canada and the Northeast United States before adapting it for insurers. The broader pressure driving demand is regulatory. Reinsurers and government watchdogs are pushing insurers to show not just that they understand climate exposure, but that they are doing something about it.

Axios recently reported that Climative is seeking an $8-10mn Series A raise next quarter to soup-up its software offerings.

Clarity AI and RiskThinking.ai have formed a partnership to offer financial institutions granular climate hazard exposure data on more than three million individual assets across 15,000 companies. The integration links RiskThinking.ai's Climate Digital Twin technology — which runs full hydrologic simulations across climate scenarios and warming levels — directly into workflows used by Clarity AI financial institution clients. (Clarity AI)

New wildfire mitigation joint venture Emberpoint named Shea LeBrun as Chief Technology Officer — a 20-year Lockheed Martin veteran who led the defense contractor’s firefighting intelligence engineering unit. The venture also appointed Benjamin Berman — former chief of air operations for the Los Angeles County Fire Department and ex-CAL FIRE rotary wing program manager — as Vice President of Wildfire Systems Operations, and Kate Grammer, a 20-year Sikorsky Aircraft veteran, as Vice President of Business Development. Emberpoint is a joint venture between Lockheed Martin, PG&E, Salesforce, and Wells Fargo. (Emberpoint) 

JBA Risk Management has overhauled its Global Flood Model with updated hazard maps and climate event sets to better support reinsurers, insurers, and asset managers grappling with flood exposure. The model runs across Oasis, Verisk Model Exchange, and Aon’s Elements platform, and is available for in-house deployment or as-needed portfolio analysis. (JBA Risk Management)

Helix Earth, a Houston-based start-up, closed a US$12mn oversubscribed Seed 2 round to support the roll-out of its energy-efficient retrofit system for commercial HVAC units. Veriten, an energy research, strategy, and investing firm, led the investment round, with participation from Rua Ventures, Carnrite Ventures, Skywriter LLC, Textbook Ventures, and others. (Helix Earth)

The private solution trap in collective action problems across 34 nations (PNAS)

Moderate global warming does not rule out extreme global climate outcomes (Nature)

Generative AI for climate governance and acceptability-constrained policy design (npj Climate Action)

Artificial intelligence and climate migration equity (Humanities and Social Sciences Communications)

Thanks for reading!

Louie Woodall
Editor