By: Kamil Kluza, Co-founder and COO, Climate X
COP30’s decision to shift the global adaptation finance target, tripling it to $120 billion annually but delaying delivery from 2030 to 2035, was presented as a pragmatic compromise. The target sets the level of global public finance intended to help countries invest in physical resilience, and yet that adjustment quietly changes the backdrop against which the financial system must plan.
Extreme weather and the impact in the mid-2030s will not resemble that of the late 2020s. It will be physically and materially worse – and that shift happens inside the lifespan of loans, assets and infrastructure already on bank balance sheets today.
The five-year delay does not create breathing room. It changes the world that institutions will need to finance.
What the next five years actually look like
Sea levels are projected to rise further through the early 2030s, which increases the frequency of disruptive flooding for coastal regions that already live close to the edge of viability. Heat will climb across major cities, raising the number of days where buildings, transport and energy grids operate under strain. Industrial facilities and distribution centres will see more weather-related interruption as storm and cyclone volatility increases.
None of these trends arrive as shocks. They accumulate. Each additional centimetre of water, each extra cluster of heat days, shifts an asset closer to the point where maintenance becomes interruption, and interruption becomes loss.
For banks, the question is less about guessing what 2035 looks like from a climate-perspective. It is gauging the cumulative impact of rising global temperatures on credit performance and physical assets in the years leading up to it.
Delay makes adaptation more expensive
The cost of delaying adaptation to 2035 goes beyond construction prices – it will be measured in damaged assets (OpEx), business interruption (revenue reduction), higher insurance premiums, and communities that cannot function. Each year without adaptation converts preventable losses into actual ones, and those losses compound. California wildfires generated £37.5 billion in insured losses in early 2025, with Lloyd’s of London reporting significant exposure. These are the costs of insufficient adaptation playing out in real time.
Commercial buildings illustrate the challenge clearly. Systems installed today must be designed for conditions in the 2040s and beyond, and not for today’s climate or even 2035’s. The issue is not that equipment installed now becomes obsolete by 2035; it’s that delaying adaptation means five more years of buildings operating with inadequate cooling, failing drainage, and heat-stressed workforces. Those productivity losses and emergency repairs cost more than proactive investment would have.
Insurance already reflects this shift. Premiums respond to exposure as it builds, not when political targets mature. Tightening insurance availability feeds directly into refinancing risk, a trend lenders cannot ignore.
Companies are preparing, but the landscape is evolving faster
Most firms understand the need to embed physical climate risk into planning, yet the tools and frameworks that support adaptation finance are still catching up. Taxonomies remain inconsistent. Data varies in depth. External guidance has only recently begun to clarify how resilience fits within established financing products.
Adaptation represents a small share of sustainable finance volumes, not because banks reject it, but because they are working to translate complex physical risks into clear, asset-level assessments. Meanwhile, the investment gap continues to grow, including in advanced economies where infrastructure and property now experience regular climate-linked disruption.
Newer analytical approaches are beginning to close that gap. Asset-level modelling now allows credit teams to quantify the specific losses an asset is likely to face and the degree to which targeted interventions can reduce them. This turns adaptation into a set of practical questions: What will this building endure? What losses are avoidable? What investments carry the highest financial return?
When institutions can answer those questions reliably, adaptation ceases to be a separate agenda. It becomes credit risk management carried out with better forward visibility.
The next five years decide the next fifteen
Climate risks accumulate according to atmospheric physics, not political schedules. Banks that develop adaptation financing capabilities now will find market opportunities in helping clients build resilience. Those that wait will face higher costs, fewer viable options, and clients less able to service existing debt as climate impacts mount.
Banks that integrate adaptation into mainstream finance now will approach mid-decade conditions with greater flexibility and lower loss potential. Those that wait for 2035 risk planning for a climate that has already long since changed and become yet more extreme.
The UNEP Adaptation Gap report estimates developing countries alone face a $187-359 billion annual shortfall. But waiting compounds the problem: every year of delayed adaptation transforms that gap from preventable future costs into actual present losses, through damaged inventory, disrupted supply chains, displaced communities, and assets that cross the threshold from financeable to uninsurable.
The gap between COP30’s 2035 commitment and 2030’s physical reality creates either a five-year head start or a five-year handicap. For the financial sector, that choice is arriving now.
