A just adaptation: The world is on fire. Are we ready for what comes next?

Look around the world right now and the message is impossible to miss. Climate impacts are no longer a future risk; they are a present and devastating reality.

So far in 2026:

These statistics are striking individually. Together, they tell a clear story: climate impacts are accelerating, affecting communities, economies and ecosystems across the globe. The question is no longer whether we need to adapt, but how we do so in a way that is fair and effective.

Climate impacts are accelerating, affecting communities, economies and ecosystems across the globe

For much of the past decade, climate action across capital markets and corporates has been dominated by the transition agenda, with significant attention directed towards decarbonisation, net zero targets and emissions reduction. While this focus remains essential, the increasing frequency and severity of wildfires, floods and droughts raises an important question: have we become so focused on the transition that adaptation has been left playing catch-up? Building resilience is now an economic and societal necessity, but the way we adapt matters. Without careful consideration of social and environmental impacts, adaptation efforts risk creating new inequalities even as they reduce climate risks.

Have we become so focused on the transition that adaptation has been left playing catch-up?

Climate resilience is becoming a strategic necessity across sectors, geographies and value chains. Yet adaptation measures themselves can create winners and losers if social and environmental impacts are not properly considered.

Measures that strengthen resilience can involve difficult social trade-offs. Rewilding a water catchment area may improve water security and biodiversity but can disrupting local farming livelihoods. Sourcing strategies can help reduce climate risks in supply chains but may have unintended consequences for workers and communities in sourcing regions.

This is why we developed our Just Adaptation Investor Expectations – to help companies and investors navigate these challenges.

We believe that adaptation strategies should seek to maximise benefits for society and nature while minimising harm, ensuring that climate resilience is built in a way that is fair, inclusive and widely supported.

Our progress in 2026

Over the past year, we have moved from developing expectations to putting them into practice within key material sectors some of our investments.

We selected three sectors for targeted engagement. Physical climate risks linked to extreme weather are material in each, but the social and environmental challenges are distinct:

1. Supermarkets – companies face climate risks primarily through supply chains, where adaptation can affect suppliers, farm workers and sourcing regions.
2. Water – companies face direct risks from droughts and flooding, with adaptation decisions affecting customers, regulators and nature.
3. Mining – companies face location-specific risks such as heat and water scarcity, with particular implications for local communities and Indigenous groups.

We have assessed eight investee companies within these sectors against our expectations and shared our findings with them. Our engagement now focuses on constructive conversations about how these companies seek to strengthen the resilience of their business models while considering the interests of affected stakeholders, understanding their local impacts, avoiding unintended harm and pursuing solutions that deliver benefits for people and nature.

Alongside company engagement, we have continued to support policy work that aims to create a stronger enabling environment for just adaptation. For instance, we provided input to the Institutional Investor Group on Climate Change’s (IIGCC) response to the European Union (EU) Climate Resilience and Risk Management consultation, highlighting the need to avoid maladaptation (where actions intended to reduce climate risk create new social or environmental harms) and to consider the ‘triple dividend’ of well-designed adaptation, meaning measures that not only reduce climate risk but also deliver wider benefits for people and nature. We also emphasised the importance of impact assessment, nature-based solutions and meaningful community engagement.

Patterns across sectors

Our assessments have already highlighted some important patterns in these three sectors.

Supermarkets: building supply chain resilience without leaving people behind

For many of us, climate adaptation can feel abstract until it shows up in our weekly shop. In recent years, UK consumers have experienced shortages of fruit and vegetables linked to extreme weather, with droughts, heatwaves and flooding reducing harvests in key sourcing regions. As climate impacts intensify, supermarkets face growing pressure to ensure food remains available, affordable and resilient to disruption.

Our assessments show supermarkets generally recognise the growing climate risks facing agricultural supply chains and have established programmes that could support adaptation, including initiatives on resilient farming, water stewardship and habitat protection. However, we identified a common gap: while companies often disclose activities that may strengthen resilience, they rarely explain how they identify and manage adaptation-related trade-offs or assess the potential impacts of adaptation decisions on farmers, workers and local communities. This is something we encourage as part of our investor expectations.

Water: a natural alignment with just adaptation

For many people in the UK, climate adaptation is becoming increasingly visible through droughts, hosepipe bans, water supply concerns and flooding. As companies invest in new reservoirs, nature-based solutions and flood defences to strengthen resilience, difficult decisions need to be made about how water resources are managed and who is affected.

In the UK water sector, companies are often well placed to consider the principles of just adaptation because their activities are local, highly regulated and connected to customers, communities and the environment. Across the sector, we found evidence that stakeholder engagement helps shape adaptation-related decisions, from water resource planning and flood resilience to nature restoration and affordability. However, companies could strengthen disclosure on adaptation-related trade-offs and how competing stakeholder interests are balanced in decision-making.

Mining: physical risks well understood, social trade-offs less considered

As extreme heat, drought and water scarcity affect mining regions around the world, companies are increasingly investing in measures to strengthen operational resilience.

Our mining assessments revealed a different set of strengths and challenges. Companies are increasingly identifying physical climate risks at the site- and asset-level and often apply environmental, social and human rights safeguards to relevant projects. We found evidence of stakeholder engagement and due diligence processes across the sector.

However, explicit just adaptation framing remains limited, with relatively little disclosure on how companies identify and manage the social and environmental trade-offs that can arise from adaptation decisions.

What happens next matters

The devastating wildfires, floods, droughts and heatwaves seen across the world this year are a reminder that adaptation is no longer a future challenge. It is a present-day priority.

The question is not whether adaptation will happen, but how. In our view, the companies that take time to understand local impacts, engage stakeholders, manage trade-offs and create benefits for both people and nature will be better placed to build resilience that lasts. In a world already feeling the consequences of climate change, that distinction will matter more than ever.

We continue to engage with our investee companies to promote a fair and inclusive approach to climate resilience and adaptation. We are always open to collaborating on this and any of our engagement programmes, so please contact us if you would like to get involved.

[1] Source: European Forest Fire Information System (EFFIS), data reported to 10 August 2026. 2025 remains the UK's worst wildfire year on record, with 47,879 hectares burned.

[2] Source: ABC News reporting on official French and Spanish government updates, published 25-26 July 2026

[3] Source: US National Interagency Fire Center (NIFC), National Fire News and Statistics, updated 6 August 2026. [nifc.gov], [nifc.gov]

[4] Source: NASA Earth Observatory, citing Australian Bureau of Meteorology data, published 29 January 2026 (updated February 2026). [science.nasa.gov]

[5] Sources: World Weather Attribution and regional reporting on South Asian heatwave, May 2026. [news-age.com], [aljazeera.com]

[6] Source: UN OCHA Southern Africa Flooding Update, 4 February 2026. [unocha.org]

[7] Source: UN OCHA Flooding Update (4 February 2026) and China flood reporting (20 May 2026). [unocha.org], [intinsight.com]

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