2 CPD Points
Summit 2025: Scaling up Adaptation Finance: balancing climate resilience and commercial returns
With the impacts of climate change already present and predicted to worsen over coming decades – there is an urgent need to invest in adaptation measures that protect assets, infrastructure, buildings and communities and make them resilient to climate change.
Yet at the same time, the UN Environment Program reports that as a result of the growing adaptation finance needs and drop in current adaptation finance flows, the current adaptation finance gap is now estimated to be between US$194 and US$366 billion per year.
The adaptation finance gap exists because of barriers that make adaptation investment challenging for both the public sector and private sector including: • difficulties quantifying the financial impact of climate adaptation measures, due to data availability and the uncertainty involved • a lack of guidance on how costs and benefits of adaptation actions can be fairly apportioned over different public and private stakeholders, and • a lack of investment models and financial instruments for adaptation that work at scale, as many mechanisms are tailored to local conditions. Progress is being made to overcome these barriers, and promising solutions exist. Collaboration between private investors and public sector is key to scaling adaptation finance and a feature of many of the evolving models in this area. The insurance sector and actuarial approaches also brings a vital perspective to the challenge. Australia is developing many adaptation solutions, in part because increasing cost of climate-related events, amongst other factors, have led to decreasing insurance affordability and accessibility. New approaches to adaptation finance, balancing climate resilience and commercial returns, are a vital part of the solution to healthy insurance markets over the long-term. With the impacts of climate change already present and predicted to worsen over coming decades – there is an urgent need to invest in adaptation measures that protect assets, infrastructure, buildings and communities and make them resilient to climate change.
Yet at the same time, the UN Environment Program reports that as a result of the growing adaptation finance needs and drop in current adaptation finance flows, the current adaptation finance gap is now estimated to be between US$194 and US$366 billion per year.
The adaptation finance gap exists because of barriers that make adaptation investment challenging for both the public sector and private sector including: • difficulties quantifying the financial impact of climate adaptation measures, due to data availability and the uncertainty involved • a lack of guidance on how costs and benefits of adaptation actions can be fairly apportioned over different public and private stakeholders, and • a lack of investment models and financial instruments for adaptation that work at scale, as many mechanisms are tailored to local conditions. Progress is being made to overcome these barriers, and promising solutions exist. Collaboration between private investors and public sector is key to scaling adaptation finance and a feature of many of the evolving models in this area. The insurance sector and actuarial approaches also brings a vital perspective to the challenge.
Australia is developing many adaptation solutions, in part because increasing cost of climate-related events, amongst other factors, have led to decreasing insurance affordability and accessibility. New approaches to adaptation finance, balancing climate resilience and commercial returns, are a vital part of the solution to healthy insurance markets over the long-term. This panel will explore the challenges and solutions for scaling adaptation activity in Australia - presenting the perspective of government and public sector finance, the private investor perspective, and the insurer perspective. The Climate and Sustainability Practice Committee will convene and chair the panel.
Alison Drill, Professor Ben Newell and Fergus Pitt
12 June 2025
