Unlocking investment for climate adaptation: Introducing the Climate Adaptation Tech & Innovation Lab
A blog by Alison Filler, Kelley Rowe, and Sammy Fookes
Bridging the Climate Data Divide: Turning Adaptation into an Investment
In our previous blog on the widening climate data divide, we argued that climate intelligence is the missing link for effective adaptation and resilience - a catalyst that can turn adaptation from a cost into a compelling investment opportunity. Without reliable climate risk data and early warning systems, governments, businesses, and communities are left unprepared for shocks and disasters, leading to devastating economic losses.
The solutions and technologies already exist, but a lack of investment and financing for climate adaptation in the Global South means they struggle to reach the people and places that need them most.
At the Frontier Tech Hub, we see an opportunity to flip the script on financing adaptation. Instead of seeing climate adaptation and resilience as a ‘cost’, we can leverage emerging technologies and tools to position it as an investment opportunity - protecting livelihoods and unlocking economic value.
But to realise this opportunity, we first need to understand what’s holding adaptation finance back and what it will take to fix it.
Image credit: iStock
The finance trap holding back adaptation
Adaptation is dangerously underfunded
We are quickly advancing towards a world that will surpass 2°C of warming, triggering profound shifts in natural ecosystems and threatening the foundations of human wellbeing. Extreme weather events are becoming more intense and less predictable, while fragile ecosystems are eroding under intensifying climate stress. This isn’t just an environmental crisis - it’s a direct threat to public health, livelihoods, and global trade.
Yet, the capital flowing to adaptation and resilience initiatives is dangerously insufficient. As the Global Center on Adaptation’s (GCA) State and Trends in Climate Adaptation Finance 2024 report points out:
Only 5% of global climate finance goes toward adaptation. In fact, it diminished from 7% in 2019-2020 to 5% of total climate finance in 2021-2022.
Adaptation finance for developing countries needs to almost quadruple. Between now and 2035, developing countries will need USD 3.3 trillion. However, at current levels only USD 840 billion will flow.
Of the limited finance, the majority goes to a small number of countries, leaving some of the most vulnerable countries behind: 54% of Africa’s adaptation finance flows to only 10 countries. The bottom 10 recipient countries receive only 1% of adaptation finance.
The numbers are clear: finance for adaptation needs to scale up. And fast. But where will this finance come from?
With many governments in the global south already facing mounting debt, the provision of more loans and debt is not a sustainable solution. That’s why there have been growing calls for a larger share of adaptation finance to be in the form of grants, to avoid worsening debt distress and financial instability.
This would mean international donors stepping up - with more international public finance being spent on adaptation. However, with significant reductions in Overseas Development Assistance (ODA) spending announced by two of the world’s largest donors (the US and the UK) and other donor countries seemingly following suit, ramping up adaptation finance in this way looks increasingly difficult to achieve.
The reality is clear: public finance (be that domestic or international) will not provide the financing needed to close the adaptation finance gap.
The private sector needs to play a bigger role. Yet, as the GCA’s report referenced above points out, the private sector has consistently financed less than 3% of all adaptation activities.
So how do we scale up the private sector’s role in adaptation financing?
The private sector stands to lose billions every year if it fails to adapt. A report commissioned by the International Chamber of Commerce found that extreme weather events have cost the global economy upwards of $2 trillion throughout the last decade. The reality is that climate change is already disrupting industries and supply chains. In agriculture and food systems, erratic weather is disrupting supply chains from farm to factory to supermarket. In transportation and logistics, rising sea levels and extreme weather are reshaping global trade routes and distribution networks. In response, the insurance industry is overhauling its risk models as climate shocks become more frequent and severe.
These aren’t distant risks - they’re already here. Companies that act now to integrate climate risk into decision-making and operations aren’t just building resilience — they’re protecting bottom lines, market share, and long-term viability
But if adaptation solutions are so clearly valuable, why isn’t capital flowing?
In the climate mitigation sector, projects are generally easier to develop and finance. Renewable energy projects often offer clear business models, predictable revenue streams, and a well-established enabling environment that supports private investment. Adaptation, however, often lacks these enabling conditions. The Climate Policy Initiative (CPI) highlights three important barriers to unlocking private adaptation finance. Building on that framing, and drawing from our own work with innovators and ecosystem actors, we see three interconnected barriers that are particularly critical—and closely reinforce one another:
Barrier 1: A lack of actionable climate intelligence – Private actors struggle to access the robust data needed to assess where investment is most needed and which adaptation projects will have the greatest impact. These critical knowledge gaps limit incentives to invest in adaptation.
Barrier 2: Mismatched investment horizons and returns – Most private investors, including venture capital funds, work on short-to-mid-term timelines—often aiming for returns within 10 years. In contrast, many climate adaptation projects generate returns over much longer periods and depend on uncertain future climate scenarios. Take mangrove regeneration as an example: investors may only see financial benefits decades later, and only if flooding occurs that would have otherwise damaged coastal infrastructure. This highlights a broader issue—adaptation investments often deliver returns by avoiding future losses rather than generating direct profits, making them harder to monetise.
Barrier 3: Difficulty scaling – Closely linked to investment timelines is the challenge of scaling adaptation and resilience solutions. These solutions are often highly context-specific—what works in one district or country may not be easily applied elsewhere, even within the same region, due to differences in terrain, climate, and local needs. But scalability depends on the ability to translate a solution across multiple contexts. Without that, it’s difficult to replicate or expand, limiting the potential for financial returns. Since investors typically look for scalable models to achieve meaningful profits, they’re likely to direct their capital elsewhere if adaptation solutions can’t demonstrate this potential.
Breaking down these barriers is hard. But at the FT Hub, we believe that technology can help make a difference. As we set out in our earlier blog, many of the technologies we need to overcome Barrier 1—like early warning systems, climate risk mapping, and other data-driven tools—already exist. The problem is that too often, these promising innovations stall at the pilot stage and never reach the communities or markets that need them most.
Why? Because it’s still incredibly hard to scale adaptation solutions. Barrier 2 (mismatched investment horizons) and Barrier 3 (challenges in scaling place-based solutions) make it difficult to attract the private capital needed for growth. Investors struggle to see timely, scalable returns—so the innovations remain stuck, and the climate data divide keeps growing.
That’s where our Climate Adaptation Tech & Innovation Lab comes in—designed to help high-potential solutions move beyond the pilot phase, unlock private investment, and close the adaptation finance gap.
Our Big Bet: De-risking Adaptation and Crowding in Private Finance through our Adaptation Tech & Innovation Lab.
As we explored in our earlier blog, climate intelligence is the foundation for building resilience in high-risk environments. But the support systems and finance needed to scale it are missing. That’s why we’re building the Climate Adaptation Tech & Innovation Lab, a new structured approach to building a stronger, more investible pipeline of adaptation solutions.
Climate Adaptation Tech & Innovation Lab is designed to unlock private capital by helping innovations move from proof of concept to market-ready, investor-ready solutions. It is structured like this:
A Research-to-Deployment Pipeline that transforms promising research into real-world pilots and scalable solutions, creating opportunities for researchers and innovators to test commercialisation pathways.
An Investment Readiness Pipeline that helps high-potential adaptation technologies stuck between grant cycles and private investment. This arm provides ventures with the business model support, market validation, and financial structuring needed to become investment-ready, whether for private capital or broader public sector adoption.
The Climate Adaptation Tech & Innovation Lab is built in collaboration with adaptation finance experts, impact investors, and researchers who all highlight the need for stronger pipelines of investment-ready solutions, as well as mechanisms to move from early-stage ideation to proof of concept.
By structuring the path from research to piloting to investment readiness, we’re breaking the cycle of adaptation solutions stalling before they reach scale. In doing so, we’re accelerating both actionable climate intelligence and private finance for adaptation—so that more communities can access the tools they need to adapt to a changing climate and build more resilient, secure futures.
Join us
We’re at a critical juncture in the fight against the climate crisis, and we have a unique opportunity to change the narrative around adaptation.
Are you working on new approaches to scale private finance for adaptation and resilience?
Do you have insights on scaling private finance into adaptation?
Want to be part of a coalition shaping the next wave of adaptation finance?
Sign up here to engage in our next round of discussions and help drive this forward.
Publish date: 22/05/2025