Financing adaptation and resilience is essential to Australia’s long term economic prosperity
ASFI is building the tools to identify climate adaptation investments and actions across the whole economy that can lower systemic risk and build long-term resilience.
Climate risk is already
affecting the financial system
Australia faces escalating physical climate risks that are already affecting productivity, infrastructure, asset values, insurance affordability and fiscal stability.
Natural disasters cost the economy approximately $38 billion each year*. This is projected to rise to at least $73 billion annually by 2060*. These impacts are increasingly visible across financial markets, with physical climate risk emerging as credit risk for banks, portfolio risk for investors and affordability pressure for insurance.
Tools to identify and reduce systemic risks across the economy, including investing in adaptation and resilience, are central to long-term economic stability. Evidence shows that every $1 invested in resilience can deliver approximately $9.60 in avoided losses*. However, investment remains limited and largely reactive.
*Costs projected to 2060 under current trajectories; Source: Insurance Council of Australia, 2025
Structural barriers are constraining investment, not capital availability
The challenge is not a lack of capital, but a lack of systems, structures and coordination to deploy it effectively.
Adaptation and resilience investments generate system-wide benefits such as avoided losses and productivity gains, while upfront costs often fall on individual asset owners or investors. Data gaps, inconsistent definitions, limited project pipelines and a lack of aggregation mechanisms continue to constrain private investment.
Priority areas
for financing adaptation and resilience
Four priority areas have been identified by key stakeholders across the financial system to support financing for adaption and resilience. These actions require collaboration across finance, government, business and civil society.
From priorities to action
With a strong track record of convening cross-sector collaboration to unlock finance and investment, ASFI is well placed to help drive the following priority actions:
Building Market Infrastructure: Taxonomy Expansion
Stronger market infrastructure is required to enable consistent identification, assessment and financing of adaptation activities. Expansion of the Australian Taxonomy is a key enabler to identify actions and activities across Australia’s economy that can reduce systemic risks and support capital allocation to adaptation and resilience solutions at scale.
Making Adaptation & Resilience Investible
While opportunities exist, many projects are not investment-ready due to weak revenue pathways, early-stage risk and pipeline gaps.
Through our work on blended finance, ASFI will explore the deployment of risk-sharing mechanisms, including concessional finance and structured public–private partnerships to support investment in adaptation and resilience.
Mobilising Capital Markets
Through our standards and market practice work program, ASFI will work with members across the finance sector to support application and integration of frameworks into market practices to embed resilience into financial decision-making and support the scaling of capital to adaptation and resilience.
Research
Insights
Work Programs
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Public Policy
ASFI is actively engaging with the Australian Government on a range of policy areas to support the flow of finance and investment for climate, nature, and social outcomes in Australia.
Leveraging our deep public sector expertise and strong government relationships, ASFI drives and supports policy reform for better climate and sustainability outcomes.
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Sustainability Standards and Practice
ASFI’s standards and practice work predominantly supports Australian financial institutions to pilot the Australian Sustainable Finance Taxonomy in practice.
ASFI works in partnership with the Australian Government and members to inform future guidance and uses, and on the international harmonisation of taxonomies.
ASFI is actively promoting Australia's approach to green and transition finance through a range of bilateral and multilateral fora, and as technical and private sector partner to the Australian Government.
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Blended Finance
Blended finance, where public investment helps de-risk projects and crowd in private investment, is a key tool for decarbonisation and climate resilience. Effective blended finance structures to accelerate the flow of capital into projects and organisations that deliver sustainable outcomes.
This work program is being undertaken in partnership with Government, in particular the Department of Foreign Affairs and Trade (DFAT), and the ACCC has granted ASFI formal authorisation to work with institutions and governments on co-designing new blended finance structures.
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Leadership and Capability
ASFI is committed to embedding sustainability into leadership and practice across the financial services landscape, and is actively working to unlock financial institution skills, leadership, and ambition on sustainable finance.
Leadership is critical to sharpening organisational focus on sustainability, driving internal buy-in and culture, and facilitating action across the real economy. ASFI works in partnership with the Australian Government, members and others to deliver targeted courses, mentor programs, working groups, member delegations and a Capability Framework.
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First Nations and Finance
ASFI is positioned to act as a partner to First Nations-led businesses, Peaks, projects, Nations and communities, as lasting impact depends on First Nations leadership being centred and supported, not substituted.
This approach embeds First Nations rights in financial decision-making; increases access to finance and support for First Nations communities and businesses; elevates First Nations perspectives and priorities across Australia’s financial system; and ensures more First Nations peoples in Australia benefit from economic self-determination.
