With record-breaking temperatures, 22,000 hectares burnt by wildfires, and over half of England in drought, the impacts of climate change in the UK have never been more tangible. These conditions have brought conversations about adaptation and resilience into the public sphere with renewed vigour, as individuals, businesses and the government attempt to deal with extreme heat.

To prepare for a changing climate, a wide variety of institutions – from JP Morgan and Allianz to the previous US administration’s Department of Defence – have highlighted the need for substantial increases in adaptation finance to support global resilience and mitigate climate risk. Financial institutions have a role to play by mobilising capital towards both new, resilient infrastructure and futureproofing existing infrastructure. Investment now can mitigate the most severe impacts of climate and nature-related risks in the future. In a recent interview, European Central Bank executive board member Frank Elderson discussed how climate change negatively impacts credit risk, growth and inflation, and over the long term has potential to affect financial stability. To counter this, climate and nature-related risks must be integrated into long-term financial decision-making.

Despite the significant risks to the real economy posed by climate change, there are also significant commercial opportunities for both the public and private sector. Investment in adaptation has substantial macroeconomic returns – a ‘triple dividend’ – as it prevents losses and stimulates economic activity, whilst providing social and economic co-benefits. The Climate Change Committee estimate financial benefits in the tens of billions if their recommended investment in cooling, flooding and water scarcity, efficiency and demand-side measures are adopted, indicating substantial commercial opportunity that adaptation creates for firms. To unlock the full commercial benefits, firms must be proactive to avoid worst outcomes and take full advantage of the co-benefits.

Below, I look at two examples of areas that require financial backing to adapt and become resilient to climate change, while offering commercial opportunities for financial institutions.

Adapted and resilient energy infrastructure

As the threat of climate and nature-related risks rise, there is pressing need to adapt energy infrastructure to ensure resilience and energy security. This is important not only for energy-sector banking clients, but also for wider industry operational resilience. During the recent heatwaves, Hungary was forced to close its only nuclear power plant due to extremely low water levels in the Danube, and, in the UK, the National Energy System Operator paid over £10 million at the end of June to secure the energy needed to meet cooling demand. The International Energy Agency has said that the electricity system is “witnessing increasing pressure from climate change”.

Identifying commercial opportunities to finance adaptation in the electricity system is hard, but shoots of innovation are emerging. One such example is Standard Chartered’s first labelled adaptation finance deal, the delivery of storm- and extreme weather-resilient solar modules in the US, UAE and Saudi Arabia – as noted in our 2025 report Sustainable Leadership (p.47). Responding to growing demand for resilient infrastructure, the deal aligns with the bank’s own Guide for Adaptation and Resilience Finance.

Adaptation of homes

Mortgage lenders in the UK are acutely aware of climate risk because of the impact of extreme weather and flooding on properties. Financial institutions, as providers of capital, can support homeowners and landlords to prepare for climate change – and some, such as Handelsbanken, already include improving flood defences as one potential use for sustainable commercial retrofit loans.

Through supporting consumers to protect their homes from flooding, financial institutions can protect their assets and support consumers to avoid the turmoil that comes with a flooded home. Financial institutions can also support consumers to cool their homes through collaboration with Government and installers. With the expansion of the Boiler Upgrade Scheme to cover air-to-air heat pumps – that can provide both heating and cooling – financial institutions can support consumers through providing information and finance to bridge the gap between Government grants and upfront cost.

Across all of these, policy certainty is needed to provide clarity to consumers and help increase demand for the associated finance. It is only when customers know they need to make improvements to the resilience of their homes, often because of good communications by trusted sources like local and national government, that they will start to take the necessary steps.