A Special Report from Adaptation Leader highlights the importance of climate adaptation and resilience in the context of climate action and environmental, social, and governance (ESG) investment strategies but finds that these issues are receiving inadequate attention.

In the lead-up to COP 27, the report Climate Change Adaptation: ESG Investing's Most Important Missing Piece? argues that the adaptation part of climate action—the effective management of new risks and business opportunities that come with a changing climate—remains a big ESG challenge for investors and the financial sector.

Feldman, founder and managing director of Adaptation Leader, said: 

"There remains a huge disparity between mitigation and adaptation in terms of awareness, available finance, and metrics to measure implementation success."

The report says that the private sector needs to change the way it thinks to make it easier to come up with and use adaptation strategies and policies that deal with climate risks holistically. Such approaches will include a commitment to public-private partnerships and the prioritisation of inclusivity, collaboration, and innovation.

Soyka, an Adaptation Leader board member, said: 

"We see little evidence that current capital investment decisions reflect an understanding of how the changing climate poses severe risks to typical business activities and society. This must change.

"Institutional investors and data providers alike can play a vital, catalytic role in increasing awareness of and urging action on climate adaptation. We call on the players in the ESG community to step up their game on adaptation and resilience, as they have on the mitigation side of climate."

The Adaptation Leader's Special Report follows the organisation's extensive comments to the U.S. Securities and Exchange Commission (SEC) urging SEC staff to improve adaptation and resilience provisions in the agency's proposed climate risk disclosure rule.

Ira Feldman, one of the authors of the report, said: 

"Significant changes to the reporting requirements in the proposed rule are needed to ensure that adaptation receives attention (from both disclosing companies and investors) commensurate with that focused on GHG mitigation." 

Source: PRNewswire

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