The world must adapt

Current CO2 concentrations are unprecedented. Concentrations have increased by almost 50% since the beginning of the industrial era. Almost all of this increase is due to human activities.1

Closing the gap

Climate finance must increase by at least five-fold annually (and quickly) to avoid the worst impacts of climate change.2

Opportunity in developing countries

Developing and low-income countries are most vulnerable to climate change, yet they only account for 3% of the global total climate adaptation finance.3

Invesco Climate Adaptation Action Strategy

The strategy's investment philosophy

We believe that adaptation projects can provide a triple dividend. They help countries avoid economic losses, bring potential positive gains, and deliver additional social and environmental benefits. 

We believe we can achieve those benefits by focusing on the key systems affected by climate change. This includes systems that produce food; protect and manage water and the natural environment; plan and build cities and infrastructure; protect people from disasters; and provide financing for a more resilient future.

The strategy is not managed in reference to a benchmark.

 

 

  • Investment risks

    The strategy is intended for long-term investment and for investors who can accept the risks associated with making investment in illiquid investments in privately negotiated transactions.

    The strategy may be adversely affected by a decrease in market liquidity for the securities in which it invests which may impair its ability to execute transactions. Investment in debt instrument may also be exposed to risks in the event of sudden asset price shocks. Especially for private placement bonds, any buy or sell trade on these markets may lead to significant market variations/fluctuations. Debt instruments are subject to the risk that issuers do not make payments on such securities.

    An issuer suffering from an adverse change in its financial condition could lower the quality of a security leading to greater price volatility on that security. A lowering of the credit rating of a security may also offset the security’s liquidity, making it more difficult to sell. Private Placement instruments are more susceptible to these problems and their value may be more volatile. Debt securities may fall in value if the interest rates change. The prices of the investment rise when interest rates fall, while the prices fall when interest rates rise. Longer term investments are usually more sensitive to interest rate changes. The value of the investments and any income will be subject to various degree of capital risk.

    Investment in private placement will from time to time rely upon projections, forecasts or estimates developed by the Investment Manager or a company in which the strategy is invested or is considering making an investment concerning the company’s future performance and cash flow.

    Projections, forecasts and estimates are forward-looking statements and are based upon certain assumptions. Actual events are difficult to predict and beyond the Investment Manager's control. Actual events may differ from those assumed.

    The strategy may use derivatives for investment purposes. It may be exposed to additional leverage risk, which may result in significant fluctuations of the value of the investments and/or extreme losses where the Investment Manager is not successful in predicting market movements. Investments in emerging markets may be more volatile than investments in more developed markets. Some of these markets may have relatively unstable governments, economies based on only a few industries and securities markets that trade only a limited number of securities.

    Applying ESG criteria to the investment process may exclude securities of certain issuers for non-financial reasons and, therefore, may forgo some market opportunities available to strategies that do not use ESG or sustainability criteria. For private placement instruments, there exists a risk of incorrectly assessing a security or issuer, resulting in the incorrect inclusion or exclusion of a security. Operational risk is embedded in operating the strategy, which is mainly linked potential valuation issues and handling restructuring or legal process related to its investments.

Climate change will challenge the way we live

Judging by global temperature rises over the years, it’s clear climate change will challenge the way we live. Find out how a 2-4°C increase will disrupt communities and why investment in mitigation and adaptation strategies is crucial. 

Video about income and Invesco’s mixed assets

Transcript

 

Our climate is changing the way we live. Investment in climate mitigation, adaptation and transition is essential to reduce the challenges the world faces. 

1.       Climate mitigation focuses on the reduction of greenhouse gas emissions (GHG).

By investing in green bonds, renewable energy, ecofriendly technologies, and infrastructure we can help manage the transition from fossil fuels and dilute their impact on the climate.

2.       Climate adaptation centres on supporting ecosystems to adapt to climate risks.

For example, with investments in social and sustainability (GSS) bonds, communities can more easily adjust to climate challenges through measures including early warning systems, reforestation, the restoration of wetlands or the building of seawalls.  

3.       Climate transition plans outline how a company will transform their operations, existing assets and business models to achieve net zero by 2050.

 

Why is climate investment needed?

The world is getting warmer.

Extreme weather events are becoming more frequent putting pressure on our infrastructure, supply chains, coastal areas, food, and water supplies.

The Paris Agreement aimed at limiting warming to 1.5° Celsius, has already been breached.

Our analysis suggests the gains will quite likely be in the 2-4° Celsius range.

 

How much investment is needed for society to adapt?

According to the Global Landscape of Climate Finance’s research, to avoid the worst effects of climate change, $9 trillion US dollars will be needed annually from now until 2030, rising to over $10 trillion US dollars annually between 2031 and 2050.

Find out more about why investing in a sustainable future could make long-term financial sense.  

Visit www.invesco.com to find out more.

Frequently asked questions

Climate adaptation refers to actions taken by governments, non-governmental organisations (NGOs) and companies to adjust and adapt to the current and future impact of climate risks.

The goal of climate adaptation is to render communities and ecosystems more resilient to the detrimental effects of climate impacts.

Climate transition refers to the steps that organisations and governments are taking to reduce emissions and move towards a low carbon economy.

Investing in climate resilience today will help mitigate future climate-related liabilities and costs, both direct (such as physical damage to assets) and indirect (such as higher insurance costs).

Related insights

  • Footnotes

    1 EPA, United States Environmental Protection Agency. https://www.epa.gov/climate-indicators/climate-change-indicators-atmospheric-concentrations-greenhouse-gases

    2 Global Landscape of Climate Finance, November 2023. Global-Landscape-of-Climate-Finance-2023.pdf (climatepolicyinitiative.org)

    3 Global Landscape of Climate Finance, November 2023. Global-Landscape-of-Climate-Finance-2023.pdf (climatepolicyinitiative.org)

    Important information

    This marketing communication is exclusively for use by professional investors in Continental Europe as defined below and Professional Clients in Ireland and the UK. It is not intended for and should not be distributed to the public. For the distribution of this communication, Continental Europe is defined as Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxemburg, the Netherlands, Norway, Sweden and Switzerland. Data as at 15 May 2025, unless otherwise stated. By accepting this material, you consent to communicate with us in English, unless you inform us otherwise. This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. Views and opinions are based on current market conditions and are subject to change. Telephone calls may be recorded.

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