One year on: What we’ve learnt from our just adaptation engagements

In collaboration with experts from academia, industry and government, Royal London Asset Management is exploring how climate adaptation can be designed to deliver fair outcomes for people and the planet - sharing insights from a year of engagement across sectors.

Why just adaptation matters

Climate change is no longer a distant threat; it’s a daily reality for communities and companies alike. But not all adaptation strategies are created equal. That’s why Royal London Asset Management launched its just adaptation engagement programme last year: to ensure that corporate responses to physical and social dimensions of climate risk are not only effective, but fair. 

Just adaptation asks companies to consider:

• Who is most exposed to climate impacts?
• Who benefits from adaptation measures?
• Who bears the cost?

If done correctly, just adaptation builds trust with customers, investors and communities, it reduces risk and it strengthens resilience. Done poorly, it can increase the risk of serious financial consequences, deepen inequality and damage reputations.

A year into our programme, we are reflecting on what we’ve learned from engaging with companies, NGOs, academics and policymakers on this issue.

As the realities of climate change intensify, investors have a crucial role to play in advancing adaptation strategies that are not only effective but just. — Trisha Mani, University of Cambridge Institute for Sustainable Leadership (CISL).

Avoiding the pitfalls of maladaptation

Our research has revealed a key risk: maladaptation - when well-meaning climate measures inadvertently harm the communities they aim to protect.

The takeaway? Companies must design adaptation strategies with a deep understanding of local social and ecological contexts. Otherwise, they risk financial losses, stranded assets, regulatory penalties, and community backlash.

The triple dividend: adaptation that works for all

A climate adaptation strategy can lead to better outcomes when it is rooted in careful planning before implementation with cross-sector collaboration, and a deep understanding of local social and environmental challenges.

This shows that adaptation can be more than a defensive measure - it can create shared value. Nature-based solutions like wetlands and green infrastructure are especially powerful in delivering co-benefits for both companies and communities.

Putting people at the centre

Investors that adopt a just transition perspective in adaptation place people at the centre of climate resilience. — Camilla Roman, International Labour Organization.

Our discussions with the International Labour Organization highlighted how climate change affects workers, both direct employees and those in supply chains. Heat stress, displacement and job loss due to climate change already affects millions, especially those in agriculture, construction, and informal jobs(3). Between 2000 and 2015, 23 million working-life years were lost annually due to environmental hazards(4).

Adaptation strategies that ignore workers’ realities risk exacerbating inequality, harming health and weakening trust in business. When workers aren’t equipped to deal with extreme weather, productivity drops, health costs rise, and supply chains face disruption. Companies must consider workforce resilience as a core part of their climate planning.

Climate hazards could cost the global economy US$25 trillion by 2050(6), yet only 35% of the world’s largest companies have disclosed an adaptation plan.

Adaptation in action: what companies are doing

Despite the fact that climate hazards could cost the global economy US$25 trillion by 2050(6), only 35% of the world’s largest companies have disclosed an adaptation plan. Through our engagement, we are encouraging firms to address both the physical and the social dimensions of climate risk.

While the term ‘just adaptation’ was new to many companies we spoke to, we were pleased to find that some companies were already taking steps aligned with its principles - even if they hadn’t labelled them as such.

Two sectors that continue to play an important role in the global transition to a low-carbon economy are mining, and oil and gas. Engaging with these companies is vital to ensure they operate responsibly and in a just manner.

Navigating trade-offs

Adaptation often involves difficult trade-offs. For example, one water company we engaged with is developing a large nature reserve to improve groundwater resilience. However, the project requires rewilding farmland, raising concerns about the displacement of local farmers and the impact on their livelihood.

Encouragingly, the company is engaging stakeholders and exploring ways to support rural and environmental skills development. This kind of inclusive approach is essential to balancing environmental and social goals.

Advocating for systemic change

Our work doesn’t stop with companies. We have also engaged with UK policymakers, where we found that adaptation remains underfunded and under-prioritised. At a roundtable co-hosted with the Institute for Government, participants stressed that adaptation has long been overshadowed by mitigation.

We will continue to advocate for a just adaptation to be moved higher up on the policy agenda, ensuring it receives the attention and resources required to meet present and future challenges.

What’s next

Royal London Asset Management is developing a set of investor expectations focused on just adaptation.

Our engagement so far has shown that while corporate adaptation planning is still in its infancy, there is a growing recognition of the need to address not only physical risks, but the social implications of how those risks are managed. From community resilience to worker safety, the fairness of adaptation responses matters - not only for affected stakeholders, but also for long-term business resilience.

Royal London Asset Management is developing a set of investor expectations focused on just adaptation. This framework will help guide companies in designing adaptation strategies that:

• Minimise harm to stakeholders
• Integrate local voices
• Deliver shared value

We look forward to publishing this guidance later in the year and hope it will spark more constructive dialogue between investors and companies on building resilience that is not only robust - but also just.

Our voting, engagement, research, and advocacy activities are designed to be pragmatic, informed by evolving market insights and local best practices, and always aligned with the long-term interests of our clients. These activities aim to enhance the value and integrity of our investment decisions.

Please note that voting and engagement practices may not apply uniformly across all Royal London Asset Management funds or strategies, as each has distinct investment objectives. For details specific to your investment, please refer to the relevant fund prospectus.

1 Maladaptation: When Adaptation to Climate Change Goes Very Wrong - ScienceDirect

2 The Triple Dividend of Building Climate Resilience: Taking Stock, Moving Forward | World Resources Institute

3 ‘Approaches to enhancing adaptation and climate resilience in he context of just transitions’ – ILO

4 World Employment and Social Outlook 2018 – Greening with jobs – ILO

5 Current wildfire situation in Europe - European Commission 

6  Climate costs are rising, but few companies have an adaptation plan |S&P Global Market Intelligence

For professional investors only. This material is not suitable for a retail audience. Capital at risk. This is a financial promotion and is not investment advice. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. The views expressed are those of the Royal London Asset Management at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.