As people and communities worldwide face increasing climate impacts, recent events serve as reminders of the challenges ahead: severe flooding in Rio Grande do Sul that tragically led to over 100 fatalities, catastrophic floods in Kenya following prolonged drought that displaced over 200,000 people, and wildfires in Western Canada that forced evacuations and worsened air quality. It’s clear that the world must build resilience rapidly. However, an enormous gap exists between escalating adaptation demands and the concrete measures to meet them.

During Climate Week NYC in September 2024, EIT Climate-KIC convened a group of panellists —from a board member of the EU Adaptation Mission to the director of innovative climate finance at the US Department of Finance Cooperation, to adaptation-focused start-ups— to discuss: How can we scale and finance adaptation efforts fast enough to keep pace with a warming world?  

The participants were interested to hear about the role of the private sector in building the market for adaptation goods and services around the world, particularly in emerging economies, as well as the process driving greater investment into this area of the green economy.

While the market for adaptation solutions is growing, many challenges are holding back its growth and implementation. These include limited access to early-stage financing for start-ups, weak institutional knowledge, unfamiliarity with adaptation-focused business models among entrepreneurship support organisations (ESOs) and investors, and the lack of reliable datasets and analytical tools to assess these solutions' impacts and commercial viability.

The discussion stressed that investing in climate adaptation solutions is not only the right thing to do, but it’s also a smart business decision as the potential costs of inaction are projected to be enormous over the next few decades.

Matt Anderson, the Founder and CEO of Cryogenx, a start-up working in urban heatwave resilience, explained how challenging it is to access adaptation data for private funding. Without those data, it's difficult for such start-ups to showcase the measurable value they bring to climate resilience.

Co-founder Katie MacDonald explained how her start-up Tailwind is addressing this gap through its Adaptation and Resilience Taxonomy, a publicly available knowledge platform that offers vital adaptation data to attract private sector engagement.

Similarly, ClimAccelerators and climate funds are beginning to open doors for private finance by connecting Micro-, Small and Medium-sized Enterprises (MSMEs) with the insights, networks, and expertise needed to secure investment in climate adaptation. These collaborative efforts are paving the way for more inclusive and effective adaptation financing, especially for communities facing the highest climate risks.

The pressing need for finance in climate adaptation

While investment in climate mitigation reached $1.2 trillion in 2022, according to the Climate Policy Initiative's 2023 Global Landscape of Climate Finance report, climate adaptation remains significantly underfunded. Experts estimate that effective adaptation requires over $160 billion annually until 2030. In emerging economies, where climate impacts are felt most acutely, current investments in adaptation amount to just $49 billion, with most of this funding coming from public sources.

The CAIL project addresses this funding gap by mobilising the private sector, encouraging investors to view climate adaptation as a vital, necessary, and profitable area. It’s a call for socially responsible, impact-driven investment that tackles the challenges we face today—and those that lie ahead. Innovations in data accessibility, resilient infrastructure, sustainable agriculture, and early-warning systems are just some of the solutions needed to build a climate-ready future.

Developing enabling conditions for MSMEs

The MSME Community of Practice within CAIL focuses on supporting micro, small, and medium-sized enterprises engaged in climate adaptation. This network includes Entrepreneurship Support Organizations (ESOs) such as innovation agencies, incubators, accelerators, ecosystem builders, venture capitalists, coworking spaces, development and non-profits, academic institutions, research entities, and angel investors.

The primary goal of this community is to enable members to develop and implement incubation and acceleration programmes tailored to private-sector climate adaptation solutions, particularly in emerging markets. This involves strengthening stakeholder capacities, facilitating networking and knowledge exchange, and promoting scalable and sustainable business models for climate adaptation solutions that attract private-sector funding.

To support these goals, the community offers webinars, training sessions and workshops on climate adaptation strategies and business model development. Both virtual and in-person networking events help build lasting connections among stakeholders.

Do you meet these requirements and want to join this CoP? Register here.

A unique knowledge-sharing platform

CAIL's approach moves beyond individual learning to merge insights from all three CoPs into a sharing knowledge platform. This initiative boosts private sector engagement and funding by addressing the scarcity of public data and evidence needed for adaptation efforts and by showing the measurable value of climate adaptation solutions.