MSCI Spotlights 'Hidden' Adaptation Investment Opportunity, FEMA Restores BRIC Grants, InsurTech Accelerator's New Cohort, and More

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There’s a strange sort of tension among investors when it comes to adaptation. While survey data suggests institutions are eager to plow capital into climate-proofing projects and companies, anecdotal evidence implies they’re having a hard time knowing where to put their money.

New research by the MSCI Institute (see ‘Finance’ below) argues we may be guilty of overthinking the adaptation investment thesis. ‘The Hidden Adaptation Economy: A New View of Corporate Resilience and Opportunity’ uses AI to screen 2,500 public companies for two signals: efforts to strengthen their own operational resilience to climate change, and the provision of resilience-building goods and services to customers. The goal is to show just how widespread corporate engagement with adaptation and resilience (A&R) already is.

And boy, is it widespread! Of the firms analyzed, fully 89% are doing at least one thing to protect against at least one climate-related hazard. This makes intuitive sense. Most companies already flag extreme weather as a risk factor in public disclosures, and for the sake of their own balance sheets understand they have to get on top of the threat.

More surprising — to me at least — was the finding that 47% already provide resilience-building goods and services. Nearly half, in other words, already make money from the A&R theme. That struck me as high. The Institute reads this as evidence that the A&R investment “opportunity set” is larger than typically assumed, and that investors needn’t wait for more precise taxonomies before moving in. But for me, at least, it’s not that simple.

First of all, it’s not clear how much revenue these companies are making from their resilience-enabling businesses. The MSCI Institute acknowledges this as a gap, admitting that “[f]or many listed companies, revenue from any one resilience-enabling product remains modest.” In some cases, the amounts made could be incidental. Think of an advanced materials manufacturer that has a small line in waterproofing membranes, or a defense contractor that has a side hustle in local government early warning systems. Sure, they are producing A&R revenues, but those revenues don’t drive performance. A conviction investor betting on A&R as a growth theme won’t want exposure to companies where the theme is diluted by a dozen other factors.

Second of all, there’s a question about causation and correlation that needs addressing. Even where companies are selling resilience-enabling products, it’s not obvious that demand for these is climate-driven. The paper offers examples where the link seems plausible — including UPVC pipes for urban drainage and sewage systems and HVAC insulation for district cooling systems. But for many others, I’d wager sales growth over any realistic investment horizon may have limited correlation with changes in weather extremes or slow-onset climatic shifts.

This is all a long way of saying that getting ‘pure’ exposure to the A&R theme through public equities looks difficult. Beyond the progression of climate change itself, a long list of macro and micro drivers will shape how these investments perform — which shouldn’t come as a shock to seasoned investors used to the ‘noise’ around factor-based investing.  

It follows, then, that cleaner bets can be found in private markets; among smaller companies with an intense focus on specific climate hazards. The problem is that such opportunities remain far less accessible to the large pools of capital available to public entities — and even for professional investors the frictional costs involved hunting them down could slow the theme’s growth.

So while the headline of the MSCI Institute paper argues that investing in A&R is easier than previously thought — I conclude the opposite. It may be even harder than we originally believed.

Louie Woodall
Editor, Climate Proof

New research from the MSCI Institute claims the climate adaptation economy is larger and more commercially accessible than investors have recognized.

The research arm for the international financial intelligence company found that 89% of listed companies belonging to the MSCI ACWI index show evidence of at least one hazard-specific operational resilience activity — spanning asset hardening, supply chain adjustments, workforce protections, and emergency-response capabilities — while nearly half generate revenues from resilience-enabling products and services. The findings span every major physical hazard category and every industrial sector. The index covers more than 2,500 companies accounting for some US$96trn in global market capitalization.

Resilience-linked revenue activities are concentrated in the industrials, financials, and information technology sectors, the study finds. Industrials firms — 64% of which offer at least one resilience product or service — supply physical infrastructure such as flood monitoring hardware and coastal protection systems alongside digital risk-analytics platforms and engineering services. In financials, 63% of companies offer resilience-related products, primarily property, catastrophe, and parametric insurance, while more than a third of banks distribute some form of weather-linked coverage. IT-sector offerings include AI-powered early-warning systems, IoT sensor networks, and thermal-management technologies for energy-intensive infrastructure.

The MSCI Institute used an AI-powered workflow to scan through thousands of public documents and websites and map their contents to a series of in-house frameworks for categorizing resilience-building activities. This unearthed potential adaptation opportunities that may otherwise have gone unnoticed.

“Companies may not be using the same language, and they may not even be looking at this [activity] as a resilience measure. For example, an industrial company creating weather‑resistant roofing or windows may not be looking at themselves as a solution provider for a change in climate … they may not be even thinking about it as a resilience-enabling activity,” Umar Ashfaq, Research Director at the MSCI Institute, told Climate Proof.

The research offers one avenue for portfolio managers to build adaptation-oriented products that dovetail with existing sustainable investment practices. For example, the Institute found that among the companies with identified resilience revenue streams, 80% meet the European Union Sustainable Taxonomy’s Do No Significant Harm and Minimum Social Safeguards criteria, while 42% already belong to MSCI’s Climate Paris Aligned PAB Index.

But Ashfaq cautioned that would-be investors should dive deeper into the resilience revenue story of each organization before committing them to a portfolio: “Companies and asset managers would have to do a certain amount of engagement activity before they can fully use this — this is not an off-the-shelf solution that could be used right away for portfolio building, but rather gives you the first few steps to understand which direction to move into,” he said.

US homeowner insurance premiums rose 12% last year to an average US$2,948 annually and will climb another 4% in 2026, as insured losses from natural catastrophes surge. Data analysis by Grist shows premium increases occurred across every region: Illinois premiums jumped 48% since 2023, Michigan 36%, Nebraska 20%, and California 16% — with a further 16% increase projected for this year. (Grist)

Climate Global and Exchange Traded Concepts announced CLIM, the first US ETF engineered to track Real Estate Investment Trusts (REITs) that are less vulnerable to physical climate risk. The product leverages financial data vendor Moody’s catastrophe models to systematically underweight assets exposed to flood, hurricane, wildfire, hail, tornado, heat stress, water stress, and sea level rise. (Climate Global ETF)

Just 31% of companies regularly assess their exposure to invasive alien species — a growing climate-related risk — despite annual global costs from these exceeding US$423bn. Survey data gathered by Fauna & Flora and the International Union for Conservation of Nature also found that while 81% of companies consider invasive alien species a material risk to business generally, only 57% extend that judgment to their own organization. (Fauna & Flaura)

Germany's €500bn (US$581bn) infrastructure and climate fund is being raided to cover ordinary budget shortfalls rather than finance new investment, according to analyses published one year after parliament approved the historic package. The ifo Institute found that of €24bn (US$28bn) in additional funds made available in 2025 via the fund, actual investment rose by just €1.3bn (US$1.5bn) over 2024 levels — implying the vast majority was redirected, mainly into pre-existing transport and infrastructure line items from the core budget. (Clean Energy Wire)

The Asian Development Bank (ADB) and UN World Food Programme (WFP) signed a cooperation agreement to jointly address food insecurity across Asia-Pacific, where 69 million people face acute food insecurity. The partnership combines ADB’s investment capacity with WFP’s operational reach across five work streams: food systems transformation, emergency assistance, knowledge products, policy support, and capacity development. (Asian Development Bank)

The Federal Emergency Management Agency (FEMA) announced last Wednesday it would reinstate the Building Resilient Infrastructure and Communities (BRIC) grant program after scrapping it last April, months after a federal court found the cancellation to be illegal.

The program had channeled roughly US$4.5bn into pre-disaster mitigation projects — including sea walls, drainage systems, and public building hardening — since its creation during President Trump’s first term. Twenty-two states that sued to reinstate the program argued those investments, alongside similar predecessor efforts, had prevented an estimated US$150bn in disaster damage over two decades.

FEMA’s announcement framed the revival as the outcome of an internal program review, claiming that under the Biden administration BRIC had drifted toward climate change initiatives and become “riddled with inefficiencies”. The agency said it would reorient funding toward what it called the nation’s "most pressing infrastructure and hazard mitigation needs" and publish a new funding opportunity on an unspecified timeline.

Twenty-four states, together with a dozen cities and counties, sued the Trump administration last Thursday over the Environment Protection Agency’s (EPA) repeal of the 2009 Endangerment Finding — the legal cornerstone for federal regulation of greenhouse gas emissions. The coalition led by Massachusetts, California, New York, and Connecticut argues the EPA acted illegally by withdrawing the scientific conclusion that carbon dioxide and other greenhouse gases threaten public health without presenting new science or legal precedent. (Office of the Attorney General of Massachusetts)

Minnesota faces annual climate change costs of up to US$20bn within decades if the state fails to prepare, according to a Minnesota Pollution Control Agency report. Impacts to health and wellbeing ranked among the highest cost categories, with air conditioning identified as the single largest required investment, followed by road upgrades. The agency called on the state to develop a dedicated adaptation finance plan and build a framework for assessing the effectiveness of adaptation measures over time. (Minnesota Pollution Control Agency)

The UK is establishing a National Heat Risk Commission to address the country's growing vulnerability to extreme temperatures. The new unit, housed by the London School of Economics' Grantham Research Institute, will draw on experts across public health, wildfire risk, meteorology, and economic productivity to diagnose gaps in national heat preparedness. The Commission will operate independently of government but will direct recommendations at both national and local authorities, with an interim report due this summer and a final report in June 2027. It is to be led by former Environment Agency Chair Emma Howard Boyd. (London School of Economics)

The European Commission opened a four-week consultation on revisions to the EU Sustainable Taxonomy’s technical screening criteria — the package of rules that determine which economic activities qualify as sustainable and can access Europe’s green finance markets. The taxonomy covers six environmental objectives, including climate change adaptation and mitigation, and its criteria govern capital flows into resilience-relevant sectors from flood-proof infrastructure to climate-resilient agriculture. Feedback closes April 14. (European Commission)

Northern Ireland’s executive has approved its third five-year climate adaptation plan, NICCAP3, which includes 280 actions spanning infrastructure, agriculture, nature, and business. The program — which is required under the UK Climate Change Act — introduces a new Peatlands Strategy, city drainage plans for Belfast and Derry/Londonderry, and a Food Strategy Framework, among other measures. (NI Department of Agriculture, Environment and Rural Affairs)

Economist Impact’s inaugural Resilient Food Systems Index ranks climate adaptation as the weakest link in global food security, with 60 countries averaging just 56.4 out of 100 on climate risk responsiveness — the lowest of four measured pillars. Agriculture-specific adaptation and mitigation efforts scored just 34. Still, around half of countries have average scores of 56 to 71, suggesting there is an opportunity to strengthen system-wide resilience. (The Economist Group)

Rising temperatures could rule out routine physical activity for millions of adults by the middle of the century, enough to kill hundreds of thousands more people annually and cost the global economy billions, according to new Lancet Global Health research. The study projects 470,000 to 700,000 additional premature deaths and US$2.4bn to US$3.7bn in annual productivity losses by 2050, depending on the warming scenario. A loss of physical activity is connected with cardiovascular diseases, cancer and diabetes, poor mental and brain health, among other maladies. (Health Policy Watch)

InnSure, a Boston-based non-profit, has tapped nine companies to join its second Creation Labs cohort, aiming to grow products targeting flood analytics, wildfire detection, and battery storage underwriting.

The InsurTech companies selected are: 7Analytics, Aillium, Delos, EVSTAR, Fast Hazard, LocationHealth, Orbital Sentry, Tenax ai, and XyloPlan. They gain access to InnSure's launch and growth platform, which connects start-ups to capital, insurers, and climate-stressed communities facing coverage gaps.

Several members are committed to bridging key data gaps that have driven insurers from markets high in climate risk. For example, Orbital Sentry is building continuous infrared wildfire monitoring from geostationary orbit, while Delos uses wildfire science and satellite imagery to write homeowners coverage in markets where availability has collapsed.

On the flood side, 7Analytics uses high-resolution geospatial data and AI models to generate property-level risk scores and flood event forecasting, and Fast Hazard models natural mitigation infrastructure — like trees and reservoirs — to generate near-instant flood simulations.

Creation Labs is backed by GreenieRE — a specialist reinsurance company focused on climate infrastructure — and the New York State Energy Research and Development Authority.

Pakistan’s space agency has launched a satellite-based climate monitoring platform to track hazards including floods, glacial lake outbursts, and sea-level rise. The Suparco Space4Climate Initiative combines satellite imagery with ground-based sensors to generate early warnings and feed evidence into policy decisions. (Geo News)

The European Space Agency has awarded OHB Sweden, the satellite systems provider, a contract to build 20 satellites for its Sterna constellation, a polar-orbiting network designed to close important atmospheric data gaps over the Arctic and enhance extreme weather forecasting capabilities. The constellation will maintain six operational satellites at any time, with two replenishment cycles sustaining coverage through at least 2042. Each satellite carries a microwave radiometer measuring atmospheric humidity and temperature profiles. (European Space Agency)

The Hazelwood Network has launched the Adaptation Innovation Lab to support early-stage climate adaptation start-ups in emerging markets. The seven initial fellows hail from Nigeria, Costa Rica, Argentina, South Africa, and Bolivia, and include Suyana Climate Insurance — which prices agricultural and renewable energy risk using satellite data and climate models — and Satellites on Fire, which deploys AI-driven wildfire detection. The Lab is supported by First Matter, Achiiv and Foley Hoag LLP with funding from ClimateWorks Foundation. (Hazelwood Network)

State of the Global Climate 2025 (World Meteorological Organization)

Record-shattering March temperatures in Western North America virtually impossible without climate change (World Weather Attribution)

Extreme precipitation, exacerbated by anthropogenic climate change, drove Peru’s record-breaking 2023 dengue outbreak (One Earth)

Interactive simulation with En-ROADS spurs climate action among decision-makers (npj Climate Action)

Adapt of die: Why progressives needs to deal with extreme weather (Institute for Public Policy Research)

Thanks for reading!

Louie Woodall
Editor