29 February 2025
By Simon Zadek & Niall Murphy
How often have you heard someone talk about ‘climate action’, when they are really talking about decarbonisation. This linguistic slip might have been more understandable in a world tracking to achieve the Paris Agreement goals of keeping temperature rises below 1.5C against historic benchmarks. But we are not in that world, evidenced by an extensive survey of scientific notables that reported 77% of respondents believing global temperatures would reach at least 2.5C above preindustrial levels, a devastating degree of heating.
The framing challenge is how best to prepare to live in a severely disrupted world by scaling ‘transformative adaptation solutions’. As South Africa’s Environment Minister, Dion George, highlighted recently in Davos at the World Economic Forum, in his role representing the G20 President, “If we’re not going to be able to mitigate properly, then we need to be able to adapt […]”.
There is no roadmap for transformative adaptation. Timely decarbonisation is a profound challenge, but there is broad consensus as to how to advance it in terms of technologies, financing and policy requirements. The same is not true for adaptation. Wealthier countries in particular have doubled down on decarbonisation, relegating their own – let alone international – adaptation to a long ‘must get to’ list of policy attention and financing. And it is true that adaptation is way more difficult than the carbon agenda in its complexity and heterogeneity of both challenges and solutions, making it hard to build standardised, scalable pathways.
Private capital will be essential to drive transformative adaptation. As we witness extraordinary geopolitical shifts as well as increasingly destructive weather events, it is ever-less likely that such investments will come principally from public sources, least of all through international cooperation. Policies count, certainly, in shaping an enabling environment, but we need to figure out how to channel private capital into enterprises and assets that will survive, be profitable, and deliver adaptation solutions in a world heading north of 1.5C, especially for low and middle-income households in vulnerable regions.
Transformative adaptation solutions are in the main not rewarded in today’s markets. Despite the self-evident need, many market-based solutions are under-valued both because of the continued mispricing of climate risk by investors, and because they struggle to be profitable in today’s product markets that misprice nature and climate. Many corporations continue to benefit from these perverse markets whilst quietly transitioning away from high-risk regions, assets, and supply chains. Smaller businesses, however, facing such mispricing often struggle to raise capital and survive, threatening the viability of many next-generation adaptation solutions that could benefit households in tomorrow’s climate-impacted world.
The paltry flow of private capital into adaptation is testimony to this problem. Today, private sector investment in adaptation remains remarkably under-developed. Despite progress in scaling measured ‘climate finance’, amounting to about US$2 trillion in 2024, little of this was channeled into climate ‘adaptation’, and the bulk came from public sources, more than 90% according to one estimate by the Climate Policy Initiative. Only an estimated 12% of the investment value of an otherwise booming climate tech in the first three quarters of 2024 was made into startups working on adaptation and resilience offerings.
Our prediction and hope for 2025 is that it will kick off a surging focus on adaptation. Adaptation must rise to the top of our collective agendas as January 2025 is declared the hottest on record with average temperatures exceeding 1.7C above historic benchmarks. We have to get on with scaling transformative solutions to meet our core needs for food and water security, robust infrastructure, health and education – just to name a few. And we hope, predict, and will work towards a greater focus on adaptation not being a distraction from the importance of pursuing a net zero goal. Quite the reverse – making the facts visible about what must be done to adapt can catalyse more ambition action on decarbonisation.
Catalysing transformative adaptation requires us to innovate, invest, and implement. Innovation is not just about technology. We need to understand more about the changes to come, and be able to translate such insights into creating the right enabling environment to super-charge the adaptation investments we need. Investment is not only about volume, it’s about making sure finance flows to solutions that can be scaled in helping the most vulnerable – which must become the basis for the largest adaptation solutions markets. Implementation, finally, seems so obvious, but in truth is hard as we witnessed in struggling to build the human and institutional capabilities needed to cope with the far simpler scaling up of renewables.
Morphosis has been created to contribute to efforts to catalyse transformative adaptation. Morphosis will contribute to wider efforts by helping to grow emerging businesses offering transformative adaptation solutions for low and middle-income households. We seek to do this through a three-fold strategy of providing:
- Investments to capitalise solution businesses.
- Insights and engagement to enlarge transition markets by helping policy makers and others shape the right enabling environment.
- Implementation support to help invested businesses successfully navigate today’s perverse markets into the future.
Our vision is that our efforts are catalytic in being financially successful, directly impactful, and magnetic in attracting many others with equal if not more ambition and capabilities into the transformative adaptation space.
There is much to do, and many actors that need to be engaged. Today, there is a compelling decarbonisation narrative and roadmap, and a vast clean energy ecosystem that includes an enabling community of policy makers, technologists, and private and public investors. We need to create the equivalent community for transformative adaptation, and we need to do this now. Above all, it needs to be responsive to the implications of our shortfalls in our decarbonizing efforts – in terms of understanding and communicating, openness to unconventional solutions, and timely ambition as to the scale needed to make solutions work for those most in need.