As the global economy navigates intensifying climate risk, private capital must play an expanded role in accelerating the shift to more sustainable, resilient, and low-carbon systems. While public policy and regulation are essential, the scale and speed of climate transitions, particularly in emerging markets, will depend heavily on private capital’s ability to mobilize and deploy catalytic investment.
Rethinking Value: From Efficiency to Resilience
Climate adaptation and decarbonization are no longer peripheral considerations, they are becoming central pillars of investment strategy. According to the latest Temasek and BCG report, adaptation-related investment remains a significantly undercapitalized space. Current financing for climate adaptation and resilience projects stands at approximately $76 billion per year, with the majority of this funding coming from public sources.
However, the demand for climate adaptation and resilience solutions is expected to grow substantially, driven by escalating climate risks and the urgent need for more resilient infrastructure, supply chains, and communities. The report highlights that this growing need will unlock new value pools across entire value chains, representing a substantial opportunity for private capital. While the public sector will continue to play a leading role in financing, private investment remains limited relative to the market’s scale and projected requirements.
By 2030, total annual investment needs for climate adaptation and resilience could reach as high as $1.3 trillion. This rapid acceleration underscores not only the scale of the challenge but also the opportunity for investors to help shape and benefit from this emerging asset class. For private equity and asset managers, entering this space early offers the potential to generate both strong financial returns and lasting environmental and social impact.
Similarly, the GIC’s paper indicates that the total investment opportunity across public and private markets, including debt and equity, in climate adaptation solutions is projected to grow substantially over the coming decades. The corresponding investment opportunity set across public and private debt and equity is expected to increase from $2 trillion today to $9 trillion by 2050, with $3 trillion representing an incremental increase attributable to global warming.
While the common model conservatively assumes adaptation demand will be reactionary, greater awareness of physical risks may prompt a shift to anticipatory action, accelerating revenue growth and related investment opportunities before 2050.
The Role of Private Equity: Mobilizing Capital for Scalable Impact
Private equity’s (PE) strengths, deep sector knowledge, operational control, and long investment horizons, position it well to drive climate transition. But the opportunity is not solely in mitigation. Adaptation infrastructure, supply chain resilience, and climate-smart technologies represent a new frontier for PE investment.
PE is emerging as a vital force in advancing climate adaptation and resilience, offering both compelling financial returns and significant environmental impact. With global investment needs, climate adaptation and resilience represent a rapidly expanding, undercapitalized market. While public funding has historically led the way, the scale and urgency of adaptation demand now present valuable entry points for private capital, particularly for PE firms equipped to identify growth opportunities, scale innovative solutions, and create long-term value.
Many segments within climate adaptation and resilience align closely with PE investment criteria: large addressable markets, high growth potential, operational inefficiencies ripe for transformation, and a growing number of private companies seeking capital and strategic guidance. PE firms can deploy a range of investment strategies—venture, growth equity, and buyouts—to support both early-stage innovators and large corporations transitioning toward resilience. In doing so, they not only catalyze decarbonization and adaptation but also unlock new value pools within existing industries.
Gunung Capital exemplifies the role of private equity in climate transformation by applying credible ESG standards and securing international financing, demonstrating how investment can drive meaningful change in carbon-intensive sectors. As an investor and strategic partner, Gunung Capital leverages its platform to scale sustainable business models and accelerate the green transition, beginning with steel and expanding into sectors most exposed to climate risk. By helping close the adaptation financing gap, the firm reinforces the view that climate resilience is not only essential but also investable. This strategic view emphasized that investment is more than capital deployment; it is a partnership approach, collaborating with portfolio companies to embed climate resilience into strategy, operations, and reporting.
To accelerate the flow of private capital into climate transitions, especially in emerging markets, blended finance also needs to take its role. Strategic partnerships with multilateral institutions, development banks, and concessional finance providers can de-risk early investments and scale commercially viable models.
A Case in Point: Transitioning Legacy Assets in Steel
In 2019, the largest private steel manufacturing company in Indonesia, PT Gunung Raja Paksi (GRP), began its strategic transformation from conventional steelmaking toward low-carbon operations. This involved introducing an electric arc furnace (EAF) to gradually replace the company’s blast furnace, which, while operationally efficient, emits up to 2.4 metric tons of CO₂ per ton of steel. The EAF process, by contrast, emits as little as 0.4 metric tons per ton and is powered by electricity rather than coal or iron ore.
To take the transition further, the company has committed to sourcing renewable energy to power its EAF operations, reducing dependence on a fossil fuel–dominated grid. The decision to decommission a functioning blast furnace, an asset valued at nearly $300 million, was not made lightly. It reflects a long-term view that climate-aligned production will not only become the industry norm but will also be increasingly demanded by global customers, regulators, and capital markets.
This experience of transition involves navigating both technical decarbonization and complex stakeholder alignment in establishing an investment framework. Kimin Tanoto, the CEO of Gunung Capital, emphasized that the goal of this investment strategy is to move away from all fossil fuel use, framing the shift as a matter of transformation rather than mere optimization. Smart investors will seek opportunities to replicate similar transitions across sectors and geographies where legacy assets can be retooled or repurposed to support climate objectives.
Conclusion
Climate transition is the defining investment challenge and opportunity of the coming decades. At Gunung Capital, we believe private equity must evolve from being a capital provider to a catalyst for transformation. We view catalytic capital not just as funding, but as a philosophy: investing to unlock systemic change in high-emission sectors while building long-term resilience and value.
Our focus is on sectors under growing climate pressure, where strategic capital can drive measurable decarbonization and adaptation. More than an investor, we aim to be a partner for change, collaborating with stakeholders to accelerate the shift toward more sustainable, responsible business practices.
