19-05-2025
The Green Economy: Don't Leave Your Money Behind
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Last month, I wrote about how Wall Street is quietly preparing for a 3°C world. Now JP Morgan is getting their clients (and supporting ecosystems) ready for a new financial normal: climate adaptation as an investment priority. The financial sector has identified its climate growth strategy.
While political debates stall, capital is already flowing to where the opportunity lies. The green economy now accounts for $7.9 trillion (8.6% of global stock markets), with climate adaptation making up a growing share, according to recent LSEG research. The question isn't whether to invest in climate resilience; it's how quickly companies can position themselves to capture this value.
However, there's a critical gap forming; the market intelligence driving these investment decisions isn't effectively reaching corporate boardroom discussions. Boards can move fast when their trusted financial advisors put the right signals in front of them, like:
Despite these compelling financial signals however, corporate climate conversations are still misaligned with market realities.
The problem is a critical bottleneck: macro-level financial insights aren't effectively translating into micro-level corporate decision-making. When big consultancies and global bodies are signaling massive ROI potential, and China is rapidly scaling adaptation infrastructure, why aren't these insights driving boardroom strategies across corporate America?
The disconnect is clear, and it is costly. The financial risk of doing nothing is rising fast. If wildfires in California and flooding in Valencia aren't enough to drive systems change on humanitarian grounds, then let's call extreme weather what it is in business terms: disruption, downtime, margin erosion.
This recognition is spreading globally. The Basel Committee on Banking Supervision, the world's forum for banking regulators, recently agreed to intensify efforts to better understand financial risks posed by climate change, prioritizing the financial implications of extreme weather events. They're also developing a voluntary disclosure framework on climate-related financial risks that will influence financial institutions worldwide.
One of the biggest obstacles is visibility. Many companies lack the granular, localized data they need to make confident decisions. Without understanding where their supply chains, assets, or customers are vulnerable, they default to a wait-and-see approach.
The data bottleneck syndrome manifests in several ways:
As a result, the halls of corporate America aren't having the best data-based conversations about climate adaptation, even as the financial case grows stronger by the day.
Yet certain sectors are moving ahead. According to LSEG data, awareness of climate adaptation is particularly strong in sectors such as real estate, utilities, and basic materials, where more than half of all listed firms are citing adaptation measures in their corporate disclosures. These industries are leading the way in translating climate risk into business strategy.
Closing these data gaps is the first step to proactive, profitable action. This means going beyond isolated risk models or annual disclosures. Businesses need connected, real-time insights that link physical climate risks to financial performance, asset health, and supplier resilience.
Here's my view on how to bridge the divide between macro financial signals and effective corporate action:
Questions we are asking in our leadership meetings:
The market is moving forward. It's the relevant data, not sustainability, that risks getting left behind.
To learn more, tune in to Sapphire virtual sessions on Sustainability and Finance & Spend Management.
