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Investing in Resilience: Three Case Studies in Climate Adaptation

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Investing in Resilience: Three Case Studies in Climate Adaptation

June 24, 2025

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Based on a round table discussion with investors from Ceres’ Investor Network, this brief lays out how leading investors are navigating climate risks and identifying adaptation opportunities, highlighting emerging best practices for investors seeking to protect portfolio value while ensuring a more resilient economy.

The case studies from IFM Investors, Breckinridge Capital Advisors, and Impax Asset Management reveal several common themes, along with lessons from first-hand experience in addressing risks and unlocking investment opportunities.

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Common Themes Across Case Studies

Markets misprice tomorrow's climate realities today

All three investors see major mispricing in today's markets, creating significant barriers to adaptation funding but golden opportunities for smart long-term investors who act now.

Yesterday's data won't save tomorrow's assets

These investors rely on forward-looking climate projections, not outdated historical trends that miss how quickly risks are accelerating.

Awareness without action is worthless

Knowing climate risks exist isn't enough. Investors need hard dollar figures showing exactly what these threats will cost their portfolios.

Think beyond your own backyard

One of the biggest missteps investors make is focusing only on direct operations--ignoring the supply chains, infrastructure networks, and communities that can suffer severe climate impacts and deliver financial shocks across entire portfolios.

Explore the three studies

Unlocking Long-Term Value Through Climate Adaptation

With $150 billion in assets under management, IFM finances critical infrastructure—airports, toll roads, ports, and pipelines— that are highly exposed to climate risk.

IFM developed a two-pronged strategy to managing that risk:

• Upfront screening: Every asset undergoes climate risk due diligence using advanced data tools.

• Portfolio-wide planning: All assets must implement climate transition plans, covering both emissions reduction and adaptation to the risks they face now—and in the future.

Adaptation investments are paying off, reducing maintenance costs, minimizing disruptions, and increasing returns. For example, investments in weather hardening a port in New South Wales, Australia meant the port could operate during severe storms, taking on rerouted cargo.

» Long-term holders have a lot to gain from adaptation.

» Resilience enhances competitiveness during climate shocks.

» Adaptation adds value—it’s not just a cost center.

How municipal bond specialists are incorporating forward-looking climate data into credit assessments

Breckinridge Capital Advisors manages nearly $38 billion in bond assets, including more than 3,500 municipal issuers—many located in climate-vulnerable regions. Yet the municipal bond market has been slow to recognize or price in physical climate risks like hurricanes, floods, and drought.

Breckinridge built a climate-integrated credit assessment process.

• It uses forward-looking data and scenario analysis to evaluate risks aligned with bond maturities.

• It goes beyond hazard exposure to assess issuer resilience—factors like community wealth, tax base, and preparedness planning.

• The firm also engages directly with issuers to encourage better disclosure and links between risk, budgets, and adaptation spending.

Disclosure is improving: mentions of climate change in official statements have grown from 5% to over 30% in the past decade. Meanwhile, secondary market pricing is starting to reflect climate risk, especially after extreme weather events. Breckinridge also tracks a rise in municipal adaptation investments, particularly among water utilities addressing flood and drought threats.

» Forward-looking data is essential—past trends miss future risks.

» Engagement reveals vital, often-missing context on resilience.

» Translating risk into financial terms drives smarter pricing—and smarter investing.

How asset managers can develop strategies for effectively engaging with companies to improve risk disclosure and management

Impax Asset Management, an asset manager based in the U.K., faces a critical challenge in its sustainable investment approach: a significant gap between the information investors need to effectively price physical risk and what companies currently disclose.

Impax developed a systematic engagement strategy to close this gap.

• It set clear expectations for risk disclosure, including geolocation of key assets and supply chain hubs, methodologies and scenarios used for risk assessment, resilience investments, and contingency planning.

• The firm prioritized high-risk sectors like utilities and semiconductors to set best practices that could apply to other industries.

Impax's engagement is yielding important insights into the state of corporate physical climate risk management. The firm has identified a small group of companies--primarily utilities --that are providing meaningful disclosure. However, most companies' disclosures remain insufficient for investors to appropriately assess risk.

» Don’t focus solely on direct operations—look for supply chain links highly susceptible to risk.

» Delve into whether companies are adequately prepared for future climate impacts.

» Ensure companies are using credible, forward-looking scenarios—not outdated optimism.

» Policy change can raise the bar where corporate action falls short.

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