How to scale private finance for adaptation and unlock new business opportunities 

Adaptation cannot wait: why the private sector matters 

Adaptation must match mitigation in urgency – and investing today is critical to reducing escalating future losses. While global mitigation finance hit US$1.3 trillion in 2022, adaptation finance totalled just US$76 billion – only 8% of which came from the private sector, compared to 54% for mitigation.  

While no country is spared from climate-related disasters, developing countries are hardest hit – and least equipped to respond. In 2022, small island and least developed states paid over twice as much in debt service (US$59 billion) as they received in climate finance (US$28 billion).  

Public finance remains far below what is needed. The Glasgow Climate Pact urged developed countries to double adaptation finance to developing countries from 2019 levels by 2025 – but even if met, this would cover only a small amount of the estimated US$203-388 billion required annually in those countries.  

Public resources alone cannot meet the scale of the challenge – and this opens an opportunity for the private sector to step up and work with governments to drive the innovation and investment needed to build resilience at speed and scale. The private sector has both the determination  and capacity to deliver scalable, locally rooted adaptation – particularly where it owns or depends on vulnerable assets and infrastructure. 

Key barriers blocking private sector investment 

What is working: turning opportunity into scalable solutions 

• Insurance innovations: concessional insurance premia and public-private collaboration – such as the Climate Insurance Linked Resilient Infrastructure Financing (CILRIF) initiative or Flood Re in the UK – create incentives for resilient investments while pooling risk to attract private capital. Parametric insurance offers fast payouts and crucial post-disaster liquidity, reducing financing costs and unlocking investment. 

• Blended finance: structures combining concessional finance, risk sharing and technical assistance can unlock private investment, like the Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) – a Green Climate Fund (GCF) backed mechanism in East Africa that blends public and private capital to scale smallholder adaptation finance. 

• Adaptation and resilience bonds: aggregated bond structures – such as European Bank for Reconstruction and Development (EBRD) Resilience Bonds – pool multiple adaptation projects into a single investment vehicle to attract institutional investors. By increasing scale and improving risk-return profiles, they can help overcome common financing barriers for smaller, localised adaptation initiatives. 

• Digital platforms and open data: tools like Oasis Hub and geospatial risk models help reduce uncertainty and guide investment. 

In addition to supporting these efforts, ICC will collect and share success stories and business experiences in scaling adaptation and mobilising finance for it through its Global Climate Opportunity Campaign, helping to amplify what works and inspire broader replication. 

Policy recommendations for governments and regulators 

At COP30 in Belém, ICC calls on governments to forge a robust and coordinated policy agenda that brings together all relevant stakeholders – including multilateral development banks, financial regulators, business, financial and insurance actors – to scale private finance for adaptation and support the implementation of the Global Goal on Adaptation. This agenda should prioritise the following three key action areas:  

1. Strengthen climate risk information and transparency  

• Build access to high-quality, open, climate risk data. 
• Mandate disclosure of physical climate risk exposures proportionate to firm size and risk in both operations and supply chains. Providing sector-specific templates to guide reporting will be key in this regard.  
• Support convergence and standardisation of adaptation metrics and taxonomies (building on UNFCCC and standard bodies’ work). 

2. Establish enabling institutions and regulatory incentives  

• Include businesses explicitly in National Adaptation Plan (NAP) design and implementation – including through procurement frameworks, public-private partnerships and regulatory sandboxes. 
• Clarify antitrust exemptions to enable pre-competitive collaboration on adaptation solutions. 
• Adjust capital requirements and credit ratings to reward climate-resilient investments and reflect physical risk reductions. 

3. Scale adaptation finance with innovative instruments  

• Support multilateral development banks and development finance institutions, working hand in hand with financial and insurance actors to expand the use of blended finance, resilience bonds and insurance-linked instruments to de-risk private investment in adaptation. 
• Promote the design and deployment of structured financial vehicles, such as adaptation bonds, underpinned by robust metrics and repayment models linked to avoided losses or service delivery outcomes. 
• Recognise the critical role of insurers and financial actors in climate adaptation by leveraging their unique data, expertise and risk-modelling capabilities. Establishing formal frameworks for public–private partnerships with insurers to prevent coverage retreat in high-risk areas and ensure continued financial protection for vulnerable communities is also important. 

This report and summary are part of ICC’s Opportunity of a Lifetime climate campaign, in the lead up to COP30 in Belém, Brazil. Learn more about our call for policy change and how to get involved.