Following this month’s United Nations Climate Meeting in Bonn, several participants “spoke bitterly” about what they considered a neglect of adaptation effort compared to (relatively) vigorous funding of climate change mitigation. There’s a tempting, even inspiring, logic in the idea that slowing or even halting climate deterioration should be considered the most urgent task; further, mitigation efforts are perhaps more attractive for both financial and political investment. A wind farm, or a carbon capture facility, or a tree-planting campaign are geographically localized and offer photogenic ribbon-cutting or golden-shoveling moments, compared to the more dispersed and longer-term adaptive work of (for example) infrastructure upgrades, incident warning improvements, and flood-related disease control.

Further, one often encounters a sentiment that resources devoted to adaptation are being resignedly, even cravenly, diverted from prevention. That reasoning, asserts Natalie Unterstell of the Brazil-based Talanoa Institute, is “understandable, ​consequential and wrong” – and, she adds, we must “consider what that is costing”:

Extreme heat is driving demand for cooling and global electricity emissions. In short, the energy transition is being attempted under exactly the conditions ⁠it is racing to prevent. Power grids, water systems and supply chains were not built for the climate we are now living in. The transition will only succeed if our systems adapt to ​today’s reality.

Some leaders resist adaptation because it feels like concession, like walking to a podium and acknowledging that the crisis they spent years ​warning about has arrived and their warnings were not enough. Even though the returns on adaptation are well established – with studies showing over $10 in benefits for every dollar invested – serious investment is still often perceived as a form of surrender.

The private sector does not need to apologize to an electorate for past failure of leadership; it need only assure stockholders that actions are being taken to optimize resilience against foreseeable risk, and Boston Consulting Group has documented the adaptive behaviors that are belatedly gaining momentum:

Physical climate risks are increasingly affecting corporate operations, asset integrity, and supply chains across multiple regions. Extreme weather events are further driving operational interruptions and pushing up both operating and capital costs. The intensity of these events is accelerating; in 2024 alone, natural disasters generated an estimated $320 billion in damages globally—20% more than in 2023… Global adaptation and resilience investment, however, remains far below what is needed, especially in emerging markets, where funding needs exceed current inflows by a factor of 12 to 14. Our analysis indicates that, to protect assets and operations, corporate investment in adaptation and resilience measures will reach $800 billion to $1.2 trillion per year between 2026 and 2030.

Among the measures anticipated by BCG is “financial adaptation, particularly through insurance products that can cushion potential losses” – because, as discussed (at regrettably great length) here last week, even a perception of uninsurable risk—or of unreliability of insurance, due to underpricing of risk—is enough to hinder activity and cripple investment. Existing types and practices of insurance are simply not designed or actuarially prepared, as BCG further observes, for the types of risk to be encountered in this future-that’s-already-here:

Coverage remains limited for hazards outside the “catastrophe” definition, including heat waves and droughts. Even where insurance exists, operational losses and business interruption—often seven to 12 times larger than direct damage—are frequently excluded. At the same time, insurers are both reducing their exposure in high-risk regions and repricing upward as climate risks worsen, thus rendering coverage more expensive and, in some areas, effectively unavailable.

In many cases already, “effectively unavailable” may be putting it mildly:

Millions of homeowners across the United States are being denied or priced out of property insurance coverage. It is estimated that between 7 percent and 13 percent of all homes in the country are uninsured, and that number is on the rise… We must recognize that very little of our built environment (i.e., our homes, businesses, public buildings, and infrastructure) was sited and designed with today’s climate and weather risks in mind, much less the risks of the next several decades.

Any suspicion of insurance industry profiteering may be undeserved:

The primary culprits are the rising toll of extreme weather as the planet warms and the millions of new homes developers have built in vulnerable areas. Insured losses from natural catastrophes in the U.S. averaged $100 billion a year between 2023 and 2025, up from an annual average of around $15 billion per year a decade earlier, according to the Insurance Information Institute.

Nor is this a localized U.S. phenomenon:

In Germany, the national insurance association has warned that premiums could double within a decade due to climate-driven claims. In France, the national natural disaster scheme, known as CatNat, has been running at a deficit since 2016, prompting the government to raise the compulsory surcharge on all property insurance policies from 12% to 20% in January 2025.

I don’t want to give insurance too much of the word count this week, but it offers insights uniquely enabled by a professionally priced marketplace of risks – both their measurement and their management. In a macro sense, though, the point here is that the work of climate change mitigation is essential – and that it is not an admission of failure to say that this work will have to take place, in years to come, in a warmer climate, hindered by a rising frequency of extreme weather events. Even instaneous mitigation tomorrow, if there were such a thing, would not reverse (or even merely halt) the changes that are locked in by present circumstances. The team at J.P. Morgan Asset Management will never be accused of sentimental “save the rain forest” thinking, but they warn that “even ambitious mitigation will not eliminate all future climate risks” and that, therefore, “tackling climate change also requires a level of adaptation to those impacts that cannot be avoided.”

I’ll steal this closing thought from the World Resources Institute: “Countries must scale up adaptation finance to support those already affected by climate change and prepare for the impacts yet to come. Doing so is a strategic investment that, via broad social, economic and environmental benefits, will contribute to global stability and prosperity.”