Schroders, a global investment manager with £867.8 billion assets under management, today launched its Climate Adaptation Investment Framework. The framework helps investors assess opportunities arising from growing demand for infrastructure, technology, products and services that build resilience to physical climate impacts.
Developed by Schroders in collaboration with CalPERS, the largest defined-benefit public pension in the US, with 2.4 million members, it evaluates 102 climate adaptation activities – specific actions and solutions designed to address actual or expected climate impacts – spanning infrastructure, technology, products and services. \u200b The framework aims to provide a consistent way to compare the economic benefits these activities may generate and where those benefits may translate into compelling investment opportunities.
From strengthening infrastructure against floods and extreme weather to investing in resilient buildings, water systems and early-warning technologies, businesses and governments are directing greater attention to adapting to physical climate impacts. According to Boston Consulting Group, annual demand for climate adaptation and resilience solutions could reach up to $1.3 trillion by 2030. However, not all of that potential spending will necessarily translate into viable investment opportunities – a distinction the framework seeks to help investors navigate.
Marina Severinovsky, Head of Sustainability, North America at Schroders said:
\u200b“Investors have traditionally viewed the physical impacts of climate change primarily as a risk to their portfolios, but there is another side to that equation.
\u200b“Climate adaptation is increasingly becoming an economic and investment consideration in its own right, as businesses, governments and communities respond to a changing physical environment. Our aim with this framework is to give investors a clearer lens through which to understand how those changes could shape investment outcomes over time.”
Nelson Da Conceicao, Sustainable Investments Director, CalPERS said:
\u200b “The need to build resilience is clear and growing. Not all adaptation solutions are investable on purely commercial grounds today; however, the framework Schroders has developed gives asset owners and investors a practical way to assess, compare, and prioritize investments. We hope it encourages productive conversations that strengthen portfolio and economic resilience.”
The framework can also be used to assess existing portfolios and provide a more concrete basis for engagement with companies around physical climate risk and resilience. It is intended to complement, rather than replace, conventional physical climate risk analysis. More information about the research and its findings can be found here.
CalPERS is the largest defined-benefit public pension in the US, with 2.4 million members. Since 1932, CalPERS has provided retirement security for state, school, and public agency employees who invest their life’s work in public service. In 1962, CalPERS expanded its services to include health benefits and now offers quality health plan coverage for more than 1.5 million members and their families. For more information, visit www.calpers.ca.gov.
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