Climate Resilience and Our New Commercial Reality

A note from the ARC team: As part of our NY climate week run-up, we’re excited to share a guest post by our partners at Deep Science Ventures on a joint project exploring opportunities to build resilience to catastrophic climate risks. Check out their work.

Update: The new report, Breaking the cascade of climate risk, is now live.

In the face of the catastrophic changes to our environment from warming of 2 °C or greater, we have an opportunity to create technologies that could scale to be the basis of a fundamentally more sustainable, resilient civilisation.

These interventions can harness the economic imperative to prepare for incoming catastrophes, driving funds into more resilient human systems: less fragile food supply chains, better detection and response to disease, truly secure water systems, and market mechanisms that are bilingual in both risk and resilience.

These are among the core conclusions of our forthcoming report, developed in partnership with Renaissance Philanthropy’s Advanced Research for Climate Emergencies (ARC) Initiative. Based on the findings, we’re launching The Deep Science Ventures Climate Emergencies Resilience Lab (CERL).

The Scale of the Opportunity

The direct impacts alone of climate-driven natural disasters are anticipated to result in a loss of 2 billion disability adjusted life years (DALYs) and $12.5 trillion by 2050. This does not take into account second and third order cascades, chain reactions of harms caused as systems designed for a stable climate unravel – to our food system, our water supply, our communications infrastructure, housing, healthcare, and energy supply.

Beyond the environmental or humanitarian aspects, this shift presents a profound financial and commercial challenge. As the Norges Bank Investment Management (NBIM) has modelled, long-term climate impacts could wipe out 19% of the value of its US equity holdings, showing that conventional risk models may be dramatically understating the threat.

However, proclamations of this kind represent an unprecedented financial incentive to act immediately. The formerly externalised costs of climate change are tipping into markets at a scale that is more than material for even extremely carefully hedged entities like NBIM. If we can harness the economic effects of this magnitude, we could plausibly reform even the most deeply ingrained structural elements of our society.

In developing our forthcoming report, we examined the collision of multiple hazard types with multiple human systems in order to properly characterise the surface area of human system vulnerabilities. The complexity of solving for climate resilience arises because hazards do not occur in isolation. Instead, they trigger chains of events and cascading feedback loops that worsen each other in a dangerous “polycrisis”. The Strategic Climate Risk Initiative (SCRI) explains that a polycrisis is not just multiple crises happening at once, but a state where interconnected risks cascade across finance, energy, food, and ecological systems.

For example, a study following the Los Angeles fires found that excess rainfall had a disproportionate effect in exacerbating the fires, rather than the preceding period of dry weather. It is clear that the fires were largely caused by global heating, characterised by wetter wet seasons and drier dry spells. What we were less well-prepared for was the impact of fire on our water supply, air quality, and telecommunications infrastructure.

Chains of interconnected risks, such as coldwave, coastal inundation, sea level rise, landslides, and the multi-faceted way these cascade through human systems, illustrate that we cannot rely on one-off solutions. To truly accommodate the coming changes, we’ll need to transition to a proactive stance, working towards proper preparation with dedicated research. The question is no longer just how we respond to disaster, but how we prepare for it by building the systems that can withstand future shocks.

Resilience is too often framed as a charitable endeavour, a necessary cost to be absorbed by the world’s most vulnerable. To intervene in this new climate reality, a systematic approach is needed to develop a new class of ventures that build resilience across key problematic areas. Our analysis shows that resilience is actually an investable frontier. By rooting solutions in human systems like food, health, and infrastructure, rather than focusing solely on the hazards themselves, we can find clearer paths to commercially viable models. This approach reveals high-upside, neglected opportunities ready for immediate venture creation, alongside non-profit and research tracks that can de-risk future investments.

What Needs to Happen Next

Our goal is to answer two central questions: what interventions do we need to make, and at what point in the system will they be most impactful?

Through the creation of CERL, we have begun the monumental task of creating and populating cluster maps of different human systems, such as food, health, and energy, and exploring the intersection of worsening cascades of hazards on these clusters. Each cluster map itself feeds into each other cluster, creating a super-cluster with myriad possible intervention points, each of which represents an opportunity area.

From thousands of candidate intervention points, we generated a longlist of 60 opportunity areas, and from there, have surfaced just the most immediately actionable starting points: 10 opportunity areas (amenable to ventures, research, and non-profit) that we should move with urgency to implement today.

There are clear learnings from this exercise so far:

• Firstly, that those interventions rooted in human systems (i.e. food or water, rather than hazards such as fire or flood) offer the highest potential routes to commercial viability. Whether it’s a commercial advantage arising from characterisation of complex phenomena, antifragile unit economics that become more profitable with more volatile markets, or technologies which can create value by restoring worthless assets, this is a space in which we’re extremely bullish. Whilst anecdotally, adaptation has been an edge case in most climate VC portfolios, we can see multiple places that hit the sweet spot of lucrative business models, extraordinary impact, chronic neglect, and technical tractability.
• Secondly, targeting direct dependencies that link human systems with ecosystem health can facilitate an outsize DALY impact by addressing points of convergence for multiple hazards.
• Thirdly, the opportunity areas performed best where we could thread the path from organism-level resilience to ecological resilience to market resilience: intentionally lining these objectives up creates ‘sweet-spot’ moments of alignment.
• Fourthly, that in some places, the precise feedback loops we’re attempting to resist can be harnessed restoratively; in some cases, in a way that can have a resilience-enhancing effect at an ecospheric level, rather than a mere local hazard reduction level.
• Finally, opportunity areas often had in common a need for mechanisms that, like ‘price’ in economic systems, can make complexity and interrelatedness tractable across the nature-financial interface, without centralisation.

This analysis has identified the most effective missing inventions, moving beyond theoretical solutions to tangible, commercially-viable projects as well as surfacing critical research questions and ecosystem-catalysing non-profit opportunities that we believe will be particularly additional.

There is a vast intervention space to continue exploring, and these 10 areas are just the very beginning. Our work at CERL moving forward aims to provide a blueprint for building the future of climate resilience, one that shifts our focus from simply managing a crisis to proactively creating a robust and enduring economy capable of withstanding the shocks to come.

Stay tuned for our findings, launching at New York Climate Week on the 22nd of September.

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About the CERL Team

Dr. Pina Fritz is DSV’s Head of Scoping for Climate. Prior to this, she worked with multiple deep tech startups and at Octopus Ventures, with a particular focus on hydrogen and microbial fuel cells. She has led an international research team across Singapore and Europe, bringing together cross-border collaboration and innovation. Her academic background spans food science and technology, with both BSc and MSc degrees from ETH Zurich, followed by a PhD in electrochemical process engineering. She also holds an MBA from Quantic.

Dominic Falcao, before founding DSV, co-founded and built Imperial College’s startup accelerator, whose alumni have collectively raised over £100 million. Notable successes include Puraffinity (£17m), Notpla (£20m), Gravity Sketch (£25m), Sava (£7m), as well as Sonalytic (acquired by Spotify) and Surreal Vision (acquired by Facebook). He is a Schmidt Innovation Fellow and has been recognised on the Forbes 30 Under 30 list.

Dr. William Summers is a Senior Associate in Climate at DSV. Before this, he was the Head of Strategic Funding Delivery at the Biotechnology and Biological Sciences Research Council (BBSRC). His research background includes a postdoctoral position at the University of Cambridge, where he studied plant-microbe interactions, following a PhD in molecular plant biology.