Investing in Adaptation: PRI’s Guide to Climate Resilience and Risk Management

The UN-supported Principles for Responsible Investment (PRI) has released an investor-oriented guide on climate adaptation and resilience. The guide highlights that carbon reduction alone isn’t enough, but rather that planning for the numerous, multifaceted challenges presented climate change is key. It offers practical frameworks for integrating physical climate risks, designing resilience strategies, and gauging adaptation outcomes. This marks a strategic shift for investors from focusing solely on decarbonization to actively managing climate vulnerability and opportunity through strong capital allocation.  

Why This Matters 

• The guide helps bridge the mitigation-adaptation gap. 

• If emissions are reduced, but no adaptation measures are taken, then physical climate risks to S&P firms could nearly double over the next 50 years.  

• PRI provides practical steps for investors to evaluate adaptation solutions, setting a clear path from risk recognition to financial deployment.  

• Framing adaptation as a responsible investment area helps bring climate-proofing into mainstream portfolios. 

What the PRI Guide Provides The PRI guide deconstructs how investors can incorporate climate resilience into decision-making, moving from risk awareness to resilience action. 

• It defines resilience as the capacity of social, economic, and ecological systems to cope with and recover from climate shocks (e.g., floods, heatwaves). 

• The guide recommends conducting climate-risk audits on portfolios to reveal exposure to hazards, transitioning from generic ESG reviews to hazard-specific analyses.  

• The guide outlines KPIs and metrics to quantify how investments strengthen resilience, encouraging consistent reporting and alignment with frameworks like the Global Adaptation & Resilience Investor (GARI) framework.  

Challenges 

Defining investability may pose challenges as not all adaptation projects lead to measurable returns. Investors need to clarify criteria for financial viability. Measuring resilience outcomes is generally difficult; investors need standardized metrics to ensure accountability over time.  

Action Items 

• Investors and asset managers should invest in projects that help communities and businesses adapt to climate change. 

• Banks and insurance companies will benefit from creating financial tools like loans that support climate resilience. Moreover, they should work with public and private partners to fund infrastructure that can withstand extreme weather conditions.  

• Companies should be open about how climate change could affect operations. Implement systems which prepare for risks such as warning systems or supply chain backups.  

• Consultancies, researchers, and analysts should continue seeking to make climate risk data easier to use, as more digestible information makes climate action more accessible. See how Responsible Alpha accomplishes this through our Services.