Mitigate. And Adapt

Corporate climate strategies rely on two legs: mitigation and adaptation. Mitigation addresses transition risk by reducing greenhouse gas emissions to limit future climate impacts, while adaptation manages physical risk by protecting assets and operations from climate-related consequences.

Consider an analogy from crime policy. Mitigation involves addressing the root causes of crime through investments in education, affordable housing, and community-building programs. Adaptation, meanwhile, relies upon law enforcement, security systems, and prisons.

Mitigation and adaptation differ rather fundamentally. The former typically carries a strategic and proactive element, unfolds over long time horizons, and generates diffuse, collective benefits. The latter delivers shorter-term, tactical benefits by reactively protecting specific assets and lives.

Historically, corporate capital allocation has overwhelmingly favored climate mitigation. Approximately 90% of global climate finance from private sources has been allocated to related initiatives.

It seems to me that various forces have favored climate mitigation over adaptation.

Mitigation perfectly suits Imanuel Kant’s approach to morality through its Formula of Universal Law: ‘Act only in accordance with that maxim through which you can at the same time will that it becomes a universal law.’ Mitigation enjoys ethical prestige, while adaptation looks self-interested. Worse, adaptation can be accused of creating a moral hazard by reducing the need for mitigation.

Furthermore, mitigation fits the ‘Save the planet’ script that casts climate change as a global drama in which righteous protagonists (scientists, activists, and global institutions) fight villainous emitters. Enlightened firms investing in climate mitigation can present themselves as heroes.

While mitigation relies on a ‘conquest’ narrative that fits enticing storytelling techniques like the ‘Hero’s Journey’, a simplistic interpretation of adaptation falls into the ‘surrender’ one. It does not make for an uplifting corporate purpose. Instead of managing terror, it risks fueling it.

And yet, adaptation must attract greater investments as physical climate risks rise. The planet is almost certainly getting warmer, with many now assuming a greater than 2-degree increase in temperature in the coming decades as a base case scenario. Increasingly frequent extreme weather events will continue to expose vulnerabilities, prompting executives to boost investments in operational resilience.

Both adaptation and mitigation hold substantial value-creation potential. Mitigation investments deliver direct operational savings, enhanced brand reputation, and competitive differentiation, while reducing the potential cost of non-compliance with future regulations (see this 2025 Cap Gemini survey).

Adaptation supports business continuity and lowers insurance premiums. The OECD notes that there is a substantial volume of economically viable investment opportunities.

Ultimately, framing climate strategy as a dichotomy between mitigation and adaptation is misleading. An integrated, balanced approach with a focus on risks and opportunities is ethically sound and helps define the optimal value-creative way forward.