Climate Change: Investor Attitudes and Shareholder Proposals
May 6th, 2021 | Maia Becker
Climate resilience can’t wait. It’s a smart, essential investment.
Climate risk is no longer a distant threat; it’s a present reality with tangible financial, social and environmental consequences. It cannot simply be “insured away,” as insurers are repricing coverage or withdrawing due to escalating costs, unreliability of traditional risk models and increased financial instability. That’s leaving asset owners – from homeowners to municipalities to pension funds – to bear the full weight of climate volatility. The undeniable message is this:
Climate resilience is not an option. It’s imperative to preserving an investment’s long-term value.
When insurance providers price out climate-related risk, asset holders must move a layer deeper. We must actively protect assets from climate change impacts rather than relying solely on insurance payouts. This means building resilience into portfolios and projects by designing and upgrading physical assets to withstand our changing environmental realities. The evidence for this approach is compelling.
Consider the billions in losses from recent Canadian disasters. The 2021 floods in British Columbia washed out highways and rail lines, the 2023 Nova Scotia floods damaged critical infrastructure and record-setting wildfires in Alberta and Quebec destroyed communities and disrupted supply chains. In 2024 alone, the Insurance Bureau of Canada found there to be $8.5 billion in insured losses due to extreme weather events. Those losses represent destroyed homes, disrupted businesses, damaged infrastructure, and communities struggling to recover. The economic and social costs of inaction are simply too high.
These are not isolated events, but rather, frequent and recurrent ones that will not abate in the future. Their recurrence signals the urgent need for a market shift that prioritizes investment capital for resilience-focused projects. For institutional investors, this presents a significant new opportunity: the resilience market.
The rise of the resilience market.
Investing in climate adaptation – from resilient infrastructure to nature-based solutions – can deliver long-term stability and value to communities, local and national economies, as well as investors. The resilience market focuses on projects that reduce emissions and actively strengthen communities against the impacts of climate change.
Much of this work begins at the local-level, where a robust resilience investment strategy includes investments in energy systems, transportation networks, community facilities and other local infrastructure. Strengthening the resilience of these critical assets plays a central role in protecting residents, sustaining local economies and ensuring long-term stability.
The challenge of this approach often lies in aggregating, standardizing and de-risking projects, as individual municipal projects are frequently too small or complex for traditional institutional investment. This is where blended finance provides an essential bridge.
The power of blended finance.
Combining public and private capital can be a highly effective approach in activating long-term solutions. Blended finance structures can be underpinned by decades of public-sector expertise in municipal finance, using catalytic public funds to perform three essential functions:
- Developing an attractive risk-return profile for private partners
- Standardizing investment structures and creating scale
- De-risking early-stage projects, especially in new fields such as resilience
By strategically combining public and private capital, blended finance structures can address all three challenges to unlock projects that might otherwise not attract institutional capital. Public funds can be used to absorb the initial risk, making projects more attractive to private investors, while private capital can then be deployed at a scale that public funds alone cannot match.
New models for investing in resilience.
In practice, this means engaging in public-private co-investment and adaptation strategies that make assets stronger. A world of opportunity opens when you co-invest alongside Canadian municipalities and structure funds that unlock risk-adjusted investment opportunities. By structuring funds to reduce downside risk, private capital can be brought in to scale up and accelerate projects that traditionally face a high hurdle rate.
When municipalities seek to upgrade critical infrastructure to enhance and sustain community resilience, a blended finance model could see the municipality provide a portion of the funding, with a private institutional investor providing the rest. The public funding could be structured to guarantee a minimum return or cover a certain percentage of losses, thereby making the project much more appealing to a private investor.
Another model involves a fund that invests specifically in community resilience projects across the country leveraging a combination of public and private capital, with the public contribution focused on addressing the unique risks of these projects. This would enable investment in a portfolio of projects – from seawalls in coastal communities to urban greening projects in cities – reducing the risk for private finance partners while achieving a durable, positive impact.
Case Study: The Better Homes Ottawa Loan Program, which offers financing for home energy retrofits that are repaid over time through property tax bills (a model known as Property Assessed Clean Energy, or PACE), was successfully scaled through a blended finance partnership. After its launch in 2021, the City of Ottawa partnered with Vancity Community Investment Bank (VCIB) in an innovative private-sector funding model that allowed the City of Ottawa to expand the program. The partnership with VCIB included an initial $3.9M credit facility that helped launch the first phase of the program and a second tranche of $30M to expand the program to more residents. The private capital injection allowed the popular program to continue expanding, thereby leveraging private-sector interest to fund essential, local climate action.
For investors, these new financial models offer a credible pathway into a market with demonstrated demand and lasting impact; one with real financial returns. By helping communities adapt, investors not only protect their own investments, but also create new, stable revenue streams.
For communities, it delivers the critical capital required to strengthen infrastructure against floods, fires and extreme heat, protecting citizens and local economies. For Canada as a whole, this approach aligns climate adaptation with financial and economic sustainability, ensuring that resilience is built into both our communities and our portfolios.
A call to unlock resilient investing.
Canada’s responsible investment community is at a pivotal moment. Embracing blended finance and fostering new partnerships between public and private sectors is a real possibility. It’s one that would unlock the capital needed to build a more resilient country. This approach would move us beyond risk management to active value creation, building climate resilience into the very foundation of our portfolios, our communities and Canada’s economic future.
As one of Canada’s leading funders and investors in municipal sustainability projects, the Federation of Canadian Municipalities’ Green Municipal Fund (FCM’s GMF) is uniquely positioned to drive this approach. Leveraging its stable endowment and with decades of success in mobilizing capital for local climate action, a strong network of more than 2,100 member municipalities and a track record of over $1.6 billion invested in more than 2,700 sustainability projects since 2000, GMF serves as a trusted bridge between public and private capital.
Creating bankable, impact-driven opportunities, GMF offers investors a credible pathway to scalable, low-risk municipal projects that meet their expectations for stable, long-term returns. Investors can strengthen their portfolios through smart, essential investments in resilience that create enduring value for both investors and communities.
Now is the time to invest in resilience to turn local projects into long term portfolio strength, unlock stable return, and be a partner in shaping a more sustainable prosperous future for everyone.
RIA Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not necessarily reflect the view or position of the Responsible Investment Association (RIA). The RIA does not endorse, recommend, or guarantee any of the claims made by the authors. This article is intended as general information and not investment advice. We recommend consulting with a qualified advisor or investment professional prior to making any investment or investment-related decision.
Author
Chris Boivin
Chief Development Officer, FCM & Managing Director, GMF
Responsible Investment Association
