The adaptation agenda has yet to leave the starting line, writes Simon Zadek
The world is not going to meet the 2015 Paris Agreement target of limiting warming to 1.5°C above pre-industrial levels. Current policies and emissions trajectories point to a landing closer to 2.5°C or bigger.
There is now a 100% probability that we are heading into uncharted, severely climate-disrupted territory.
Many communities and entire nations are already there – not just the tragically self-evident from Jamaica to Bangladesh, but the less obvious. Switzerland, according to a recent authoritative report by ETH Zurich, in a world with a temperature rise of 1.5°C, would experience a rise of 2.9°C and would experience rises of 4.9°C if the planet warms up by 3°C.
As I pointed out in a piece released before COP28 in Dubai two years ago, 'it is time to plan for a world beyond 1.5°C'. This is not a surrender; it is urgently needed pragmatism. Estimated costs of physical damage caused by climate change exceeded $300 billion in 2024, or about 0.3% of global GDP. Projections suggest that without large-scale investment in adaptation, these costs could rise to 20% of GDP or more by mid-century.
The uncomfortable truth is that the world was not prepared for 1.5°C, and is even less prepared for 2.5°C. Adapting to a climate change-affected world has long been overshadowed by attempts to reduce the pace of climate change by reducing carbon emissions. This is all about to change, not because mitigation should be de-prioritised, but because it is nonsensical and irresponsible not to act now in the face of impacts we can already see, feel, and breathe, and those that we know are to come.
Andre Correa de Lago, the COP30 president, and Ani Toni, the COP30 CEO, have both made repeated statements that adaptation needs to be on the policy front burner. As Brazil's President, Luiz Inácio Lula da Silva, has stated, "If we fail to move beyond speeches into real action, our societies will lose faith – not only in the COPs, but in multilateralism and international politics more broadly".
But we are still on the starting line on the adaptation agenda. Investment in adaptation has to date been small, less than 5% of total climate financing in 2024. Also, it has largely come from governments, as much as 85-90% according to the Climate Policy Initiative. For President Lulu's words to be taken seriously, this state of affairs cannot continue, especially as public finance is an ever-scarcer resource in the face of growing, widespread fiscal crises and other policy priorities.
What is needed is to unlock business and economic potential in profitably delivering adaptation-relevant products and services. This would attract the private investment needed to enable scale that would bring down costs and increase affordability. Such products need to meet basic needs, nutrition, water and sanitation, shelter, energy, health, education and security. But adaptation solutions will also be needed to secure more advanced needs such as mobility and communications and technology-rich parts of our global economy, including AI, robotics and the increasingly important bioeconomy.
The good news is that a global adaptation economy is on the rise. The London Stock Exchange Group estimated its scale in 2024 to be US$1 trillion. Singapore's sovereign wealth fund, the GIC, has projected substantial growth from $1 trillion today to $4 trillion by 2050. Boston Consulting Group found that the adaptation and resilience market for private equity investors may grow to $1.3 trillion by 2030.
The bad news is that in today's market conditions adaptation solution businesses are often unprofitable because markets do not price climate risk correctly and are distorted by the wrong or missing policies. As a result, these businesses are often undervalued and undercapitalised and cannot invest in the scale needed to bring down costs so as to serve the largest adaptation markets for low and middle-income customers.
Policy action is needed to catalyse a global adaptation economy. We know how to do this. The $2 trillion annual investment market in clean technology was initially catalysed by Germany as a consumer and then China as a producer. Now every market is supported by the hidden hand of standardised policy frameworks that have created the conditions for investment to flow.
Adaptation markets do not yet have an equivalent policy playbook to circumvent the continued ad hoc, fragmented and incremental developments. Some progress has been made through National Adaptation Plans, some national economic strategies and efforts by key international bodies such as the OECD and the World Bank, as well as leading businesses such as Standard Chartered.
With this need and use cases in mind, a public-private partnership was formed in early 2025 to lay out how governments might effectively play this role. Including the Brazilian research institute, Fundação Getulio Vargas, and the Paulson Institute, the Morphosis-led partnership has developed an Adaptation Economy Policy Framework that was released in Sao Paolo in the run-up to COP30.
At its core, the Framework focuses on policies that advance markets that will attract private capital into adaptation solution businesses. The Framework covers seven policy domains, including innovation and entrepreneurship, financial sector development, climate risk pricing and disclosure, and public procurement. Its implementation ensures that adaptation can be advanced as a core aspect of macroeconomic, industrial and employment policy, rather than as a climate 'add-on'.
These domains provide a whole-economy lens — linking finance-focused approaches with the real-economy dynamics that determine whether adaptation markets can thrive. When governments put the right frameworks in place, including but not just money, they create the enabling environment for businesses and civil society to act.
Governments should use COP30 to turn adaptation into a front-and-centre policy, but centrally an economic as well as a climate priority. They should commit to building economic and industrial strategies that place adaptation as a core context and driver. Doing so would go beyond protecting today's economies, jobs and communities; it would catalyse the new markets and capabilities needed to adapt to climate change, generating new jobs, new businesses and inclusive sustainable growth.
The world stands at a crossroads: the era of adaptation has begun, and in embracing this, we can reinvigorate the cause of emissions reduction as well as safeguard both people and prosperity in a hotter, more volatile world.
The "Rise of the Adaptation Economy", the briefing and the full report in English and Portuguese, and related technical papers, can be downloaded at https://www.morphosis.solutions/adaptation-economy
Simon Zadek, Managing Partner, Morphosis