Investors should turn their eye to adaptation

©Jakob Dall

Op-Ed by:
Niels Ingeman Moller, Chairman of the board, Ingeman
Peter Damgaard Jensen, Global Commissioner, Global Commisson on Adaptation
Birgitte Qvist-Sorensen, General Secretary, DanChurchAid

We are in the midst of a climate crisis, and it is a challenge we all must act on. That is also a reality many investors are acknowledging, and these days an increasing amount of investments are moving towards climate related projects. However, investments are not only needed in wind turbines, solar power and electric cars. We also need to adapt to the already changing climate. Investors should see beyond mitigation, and also invest in adaptation.

At the UN General Assembly last year, the government of Denmark, a number of pension funds, institutional investors, and the World Climate Foundation presented themselves as part of a climate investment coalition, with a goal of making climate investments, worth 50 billion USD, by 2030. This week the coalition meets again, but now they are joined by other investors, ministers, donor representatives and experts. The meeting is called the Copenhagen Climate Investment Summit.

Investors will of course look for return on their investments. However, investments must be protected, and in a climate constrained world, a sustainable investment strategy will need to incorporate adaptation measures. Otherwise, we risk undermining other investments, if millions of livelihoods are lost and natural resources are degraded. The increasing attention to adaptation is also opening for investment opportunities with high development impacts for local communities and the environment, e.g. through farmer advisory services or climate adapted insurance schemes. Investments in adaptation will be part of the agenda, of the summit in Copenhagen.

Last year, the Global Commission on Adaptation launched the report: Adapt Now. The report stresses the need for action, and for an increased focus on adaptation. However, the report also documents that there is an investment gap in adaptation measures, and that there is a potential of a rate of return on investments in resilience ranging from 2:1 to 10:1.

A concrete example of an adaptation project with investment potential is a new partnership between the Danish NGO DanChurchAid (DCA), a Danish company Ingemann, Momentum Trust, and a Kenyan microfinance institution Juhudi Kilimo. The project, which is supported by the Danish Ministry of Foreign Affairs, supports climate resilient agriculture in the chia and vegetable value chains. 3000 local farmers will be able to increase their production through digital advisory services and improved access to credits based on climate related information and data about the weather and soil. It is an adaptation solution that combines investments, a sustainable business model and local development for smallholder farmers.

Billions of dollars, for climate action, were promised by investors in New York last year, and this week investment strategies and best practices will be discussed by key stakeholders at the Summit in Copenhagen. The pool of funds is now being mobilized and turned into action. We hope investors will see the future in adaptation, and genuinely look for projects which can make a difference for the people hardest hit by climate change. They may be vulnerable to the effects of climate change, but they are ready to engage and to improve their resilience to cope with storms, floods, and droughts. But they need support. Support, investors and donors can mobilise.