Unlocking Profit: How Climate Adaptation is Fueling the Green Economy Boom | Recessary News

Author: Lin Bo-yu
Category: Finance
Date: May 13, 2025

Climate change is forcing businesses to rethink how they operate. Climate adaptation is at the forefront of this shift, acting as a boost for the green economy. A recent study by the London Stock Exchange Group (LSEG) revealed that climate adaptation solutions brought in an extra USD 1 trillion globally last year. Notably, over 30% of the companies surveyed are actively addressing climate adaptation, especially in real estate and utilities.

According to LSEG’s annual Green Economy Report, released on April 12, green products and services hit a record high of over USD 5 trillion in revenue. This included significant contributions from green buildings and water infrastructure, with climate adaptation making up about one-fifth of the total. Over the last decade, the green economy has seen a compound annual growth rate of 15%, trailing only the tech sector in growth. Notably, energy management and efficiency have emerged as the biggest players in this space, showcasing strong performance.

It’s interesting to note that Asia accounted for 44% of global green revenues, with emerging markets growing at almost double the pace of their developed counterparts.

Despite political hurdles, such as climate policies being weakened during the Trump administration, businesses continue to show interest in both climate mitigation and adaptation. This focus is translating into real profits. Jaakko Kooroshy, head of Sustainable Investment Research at LSEG, mentions that while only a handful of businesses focus solely on climate adaptation, many are making significant money in this area.

The increasing frequency of severe climate events is pressuring companies to act. One effective way for investors to engage with climate adaptation is through green bonds, which have become crucial for financing. Most national green bond frameworks allow funding for climate adaptation projects, such as upgrading buildings to make them more resilient.

Kooroshy stresses the urgency of taking action now. He notes that investing in resilience is cheaper than dealing with the costs of disaster recovery later. Early investment provides a strategic edge and can mitigate future risks more effectively.

Research indicates that companies prioritizing climate adjustment not only prepare themselves for future challenges but also stay competitive. As consumers become more environmentally conscious, brands that lead in sustainability often gain more customer loyalty and market share.

Overall, the financial sector and various industries are recognizing the importance of climate adaptation. By investing in these solutions today, companies can foster sustainable growth and prepare for the challenges ahead.

Sources: LSEG, Bloomberg

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climate change,adaptation,economy