Extreme weather events are driving greater focus on climate adaptation efforts. (Photo: iStock)
Climate adaptation is emerging as a new engine propelling the green economy in response to the impacts of climate change. A recent study by the London Stock Exchange Group (LSEG) revealed that solutions related to climate adaptation generated an additional USD 1 trillion in global revenues last year. Among the companies surveyed, over 30% reported taking action on climate adaptation—especially those in the real estate and utilities sectors.
Green products and services reach record revenues
On April 12, the LSEG released its annual Green Economy Report, which showed that green products and services generated more than USD 5 trillion in revenue last year—a record high across the past six reports. The largest contributions came from green buildings and water infrastructure, while climate adaptation accounted for roughly one-fifth of the total.
Over the past decade, the green economy has achieved a compound annual growth rate (CAGR) of 15%, ranking second only to the technology sector. Among all green sectors, energy management and efficiency remain the largest and best performing. Regionally, Asia contributed 44% of global green revenues, with growth in emerging markets nearly double that of developed economies.
Over the past decade, energy management and efficiency have remained the largest and best-performing sectors in the green economy. (Image: iStock)
Climate adaptation turns into a profit source
Despite political setbacks—such as climate policies facing challenges during the Trump administration—business interest in both mitigation and adaptation remains strong, translating into tangible profits. According to Jaakko Kooroshy, Head of Sustainable Investment Research at LSEG, while relatively few companies center their core business on climate adaptation, many generate significant revenues tied to it.
The report notes that increasingly frequent and severe climate impacts are forcing companies to act. Green bonds are highlighted as one of the best ways for investors to engage in climate adaptation and a vital financing tool for both governments and companies.
Under most national green bond frameworks, expenditures related to climate adaptation typically qualify for funding. Common investment areas include retrofitting buildings to enhance climate resilience and reduce environmental impact.
Kooroshy further emphasized the urgency of action. He noted that mitigation efforts remain less costly than adaptation, and that investing in resilience upfront is more economical than paying for disaster recovery later. Early action, he suggests, offers a clear strategic advantage.
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