Investing in Tomorrow: A Guide to Building Climate-Resilient Investment Portfolios

15 January 2025 - The climate crisis demands immediate attention—not only to mitigate risks but to adapt and build resilience. This guide serves as a roadmap for investors to build climate resilience within their portfolios and invest in systemic resilience through engagement with the broader ecosystem.

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Developed by the Investment Leaders Group within CISL’s Centre for Sustainable Finance, this guide takes a unique view by breaking down what needs to happen at each stage of the investment process for listed equity and debt portfolios, deploying tools and strategies already available in the market.

While efforts around climate change mitigation are gradually gaining momentum, the emphasis on building adaptation and resilience has been minimal. The financial implications of extreme weather events are becoming increasingly apparent for the private sector. Economic losses from extreme weather in Europe alone reached €13.4 billion in 2023, and the numbers are expected to rise, with the climate emergency hitting parts of the global south much harder.

While investors are aware of the need to integrate physical climate risks in financial decision-making, approaches to addressing it remain nascent, fragmented and unfamiliar. The systemic nature of physical climate risk therefore requires systemic risk management and a two-fold approach from private capital: (1) making investment portfolios resilient to these risks, and (2) also actively investing in resilience measures to strengthen the broader ecosystem.

This guide is designed to serve as a roadmap for investors, and is structured in two main sections:

1. In focus: the investment process: illustrates how decisions made early on can significantly impact subsequent stages and opportunities, emphasizing the need to address physical climate risks from the outset.
2. Changing the landscape: engaging with the enabling environment: examines the different ways in which investors can proactively engage with policy, the real economy, the broader financial sector and within their own organisations to enhance systemic resilience.

Key takeaways from the report include:

• By integrating physical climate risks at the start of the investment process, investors can be better prepared to assess and address their exposures at subsequent stages.
• Incorporating physical climate risks in asset allocation is critical to understand how they affect both short- and long-term economic and return forecasts.
• Taking an active role in engaging with portfolio companies on adaptation and resilience can help investors enhance long-term value, mitigate climate risks and drive sustainable growth.
• By engaging with the broader financial system - building on learnings from the insurance industry and blended finance structures, investors can leverage innovative financing models to invest into adaptation and resilience.
• Collective action is required at the national and international levels to scale ambition for NDCs and NAPs, make them more investable and catalysing the flow of private capital.

“We view climate adaptation and mitigation as equally important, not mutually exclusive. A comprehensive approach to managing climate risk must address both. Yet, too often, the focus remains on mitigation with the physical risks either overlooked or underestimated. “Investing in Tomorrow” provides much needed clarity, offering practical guidance, examples, and actionable steps to mobilise private capital investment towards a more resilient future.”

Eric Nietsch, CFA – Head of Sustainable Investing, Asia, Manulife Investment Management

"Addressing the climate crisis requires a massive mobilization of private capital towards mitigation, adaptation and resilience building. This guidance aims to bridge the knowledge derived from physical climate risk assessments with the investment decision-making process.”

Mette Gahr – Climate Investment Analyst, Zurich Insurance

“With global temperatures already breaching the 1.5 degree threshold, and extreme weather increasingly impacting insurance coverage, it’s important that investors should assess portfolio resilience to physical climate risk. This report brings together academic and practitioner insights to support that process.”

Max Richardson – Senior Investment Director, Rathbones Group

Adaptation and Resilience is becoming the currency of the future. As physical climate risks increasingly impact vital systems, climate-proofing investment portfolios is emerging as a key competitive edge.  The CISL guide not only highlights why it’s crucial for investors to address physical climate risks but also provides practical advice on how to integrate these risks into the various stages of the investment process. It also highlights the need to advocate for an enabling environment, where collaboration will be key to shaping the New Adaptation and Resilience Economy.

Sabrina Nagel – Global Policy and Finance Advisor, Atlantic Council Climate Resilience Center

"The clock is ticking — investors face a critical choice: act now to safeguard portfolios and invest in resilience, or risk the future of both their assets and the global ecosystem. As climate risks intensify, this guide offers a clear path to build resilience and drive systemic change for a sustainable, adaptive future."

Dr. Nina Seega – Director, Centre for Sustainable Finance, CISL

Citing this report 

University of Cambridge Institute for Sustainability Leadership (CISL). (2025). Investing in Tomorrow: A Guide to Building Climate-Resilient Investment Portfolios. Cambridge, UK: Cambridge Institute for Sustainability Leadership.

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