Investing for Climate Resilience and Adaptation - Small Group Discussion Summary
As part of continued efforts to engage with investors outside of the United States and Europe, Project Frame and Green Artha co-hosted a small group discussion on investing for climate resilience and adaptation on Dec. 14, 2023. This follows a presentation by Project Frame Director Keri Browder at the India Climate Capital Network earlier in 2023.
Seven investors, funders, and ecosystem stakeholders representing India, Japan, the United States, and South Korea took part in the discussion, including GLIN Impact, Omnivore VC, India Climate Collaborative, India Impact Investors Council, Center for Social Value Enhancement Studies, Ankur Capital, Prime Coalition, and Green Artha.
We were energized by the enthusiasm, willingness to share, and eagerness to evolve. The closed door session was intended to promote partnerships and chart a path forward by discussing important questions like:
Why has the vast majority of climate investment dollars gone toward mitigation?
What are the dangers of focusing solely on GHG reduction in our response to climate change?
What are some potential innovations in the marketplace that are in need of private investment?
How do we measure, assess, and evaluate the effectiveness of adaptation and resilience solutions?
A lot of ground was covered in the 75-minute conversation, with multiple insights emerging across a few key themes.
In brief, participants agreed that the climate crisis requires us to look beyond mitigation and support adaptation solutions urgently but issues of perception and the lack of dedicated frameworks and case studies remain a barrier.
Key Takeaways
Aligning Incentives
The climate crisis is far too pressing for mitigation alone, yet mitigation attracts the vast majority of capital.
Mitigation is not entirely separate from climate resilience and adaptation, and these approaches can and should be tied together while looking for solutions.
Climate capital largely sits with the Global North. To date, because of the local and contextual nature of climate impacts, adaptation funding has received less interest because of the absence of immediate manifestation in the capital-holding geographies. However, with climate impacts now felt not just in the Global South but the Global North as well, there is an increasing need and intent to fund adaptation; but capital must move faster.
Tech: Enabling vs Disrupting
VC culture places a premium on new, disruptive technologies, overlooking existing viable adaptation and resilience solutions. Disruptive technologies typically face resistance to adoption. Existing solutions with a larger market opportunity are worth betting on.
Resilience and adaptation solutions can often result in incremental change. Incremental change can still bring about long-term impact.
Data and Digitization: VC must invest in tech enablers that capture on-ground realities, such as water levels and air quality. For instance, satellite tech can capture aspects such as land conditions, crop health, or movement of insects.
Boundary Conditions for Tech Adoption
Adaptation solutions must be rooted in viable business models to succeed. They must supplement income, jobs, and overall livelihoods.
Corporations have the resources to support adaptation solutions by driving large-scale adoption.
Investment Toolkit
Different financial instruments are apt for different durations and impact scales.
There is a perception of high upfront costs, long time horizons, and low returns for adaptation and resilience solutions, further highlighting a need for blended finance models and bridging silos between the public and private sectors.
Taxonomy & Measurement
A standardized adaptation measurement framework is absent. Many funders are working on building frameworks that effectively capture impact numbers.
There is a glaring need for publicly available use cases of climate finance in the adaptation and resilience context. Real-world examples and data will help in the development of an impact measurement framework or methodology.
Funders are employing existing frameworks, such as the logic model or the lean data methodology, to measure adaptation impacts against KPIs. These face challenges of data loss and lack of specificity.
Beneficiary well-being, captured via surveys, can serve as a key baseline in measuring adaptation impact. This could range from jobs, community sentiment, safety, etc. As this is largely qualitative, funders continue to explore efficient ways to capture this data.
LPs need to be involved and support impact measurement. They must be included in the design and execution of the process and take more ownership of this evolving process.
Call to Action
Lead by example! Submit an Investor Profile and discuss your experience incorporating adaptation and resilience into your pre-investment strategies. Email us at impact@primecoalition.org to get started.
