Responsible investment: Just adaptation investor expectations

At Royal London Asset Management, we’ve outlined expectations which investors such as asset managers and asset owners can adopt when assessing companies’ climate adaptation strategies.

Download the Just adaptation investor expectations guide

As climate change accelerates, adaptation (e.g. resilience building) is becoming as critical as mitigation (e.g. emissions reductions), but it is essential that efforts to build resilience are fair, inclusive and equitable. Just adaptation refers to climate adaptation strategies that aim to maximise positive outcomes for society and nature while minimising the risk of harm. Adaptation is complex and will inevitably involve unavoidable trade-offs. To avoid ‘maladaptation’, companies must consult stakeholders early and design strategies that reflect local social and ecological contexts, increasing the likelihood of widely supported and effective outcomes.

Key findings from Royal London Asset Management’s research and engagement

• Climate adaptation could deliver a “triple dividend”:

1. Aiming to reduce risk and unlock potential financial opportunities
2. Enhancing social and economic wellbeing
3. Supporting biodiversity

• Poorly designed adaptation measures can pose significant risks to communities and ecosystems.

Inclusive approaches, especially those that reflect stakeholder voices and incorporate nature-based solutions, are more likely to deliver co-benefits and achieve the triple dividend.

Investor expectations support our stewardship efforts while aiming to help fellow investors approach often-overlooked aspects of climate change.

We engaged with experts and policymakers in developing these investor expectations. We extend our gratitude to all including these named individuals and organisations for their expertise, participation and support:

• Policymakers & regulators: UK Department for Environment, Food and Rural Affairs (DEFRA), Environment Agency (EA), Local Government Association (LGA), Climate Change Committee (CCC), HM Treasury (Treasury) and the Department for Transport (DfT)
• Academics: Trisha Mani, Cambridge Institute for Sustainable Leadership (CISL)
• International organisations: Camilla Roman, International Labour Organisation (ILO)

Collaboration between policymakers, companies, investors, and communities will be vital to move just adaptation higher up the climate agenda and ensure that no one is left behind.

A call to action

Investors have a pivotal role to play in a fair and just approach to climate change. Royal London Asset Management urges investors and companies to integrate just adaptation into their strategy and policies. We encourage companies to engage stakeholders early, and advocate for clearer government adaptation frameworks to avoid unintended harm and build resilience.

Download the Just adaptation investor expectations guide

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.

Investor expectations support our stewardship efforts while aiming to help fellow investors approach often-overlooked aspects of climate change. We welcome hearing from you to discuss this important topic and more.

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.

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.