The private sector starts to invest in climate adaptation

“WE’RE GOING to make a lot of money,” says Ken LaRoe, chief executive of Florida’s Climate First Bank. That might seem like an unseemly boast from a traditional banker peddling conventional loans. But the lender aims to make its profits by financing green refrigeration, construction retrofits and other investments designed to help borrowers adapt to climate change. “Storm-hardening is getting to be a really big thing in Florida,” Mr LaRoe reckons, “which will be a nice lending opportunity for us.”

The need for such spending is clear. The UN Environment Programme reckons that annual adaptation costs in poor countries alone are likely to rise from around $70bn today to $140bn-300bn in 2030, and twice that by 2050, in nominal terms. It seems likely that private investors will have to get more involved. According to the Climate Policy Initiative, an expert body, they contributed a paltry 2% to global adaptation spending in 2018. The apathy reflected, among other things, a lack of reliable data on climate risks and the perception that adaptation offers low returns. But the mood could be shifting, as Mr LaRoe’s enthusiasm suggests.

There is reason to think that investing in climate adaptation can pay off handsomely, if only because not making such investments can cost companies. A study in 2019 by BlackRock, an asset manager...