The rise of climate adaptation tech

Cutting emissions is essential to avoiding the worst of climate change, but we also have to deal with the impacts of climate change happening now. Fortunately, there’s a growing list of technologies that could help us adapt — and potentially turn a profit for investors, too. Will these emerging adaptation and resilience (A&R) technologies take off as an investment category?

In this episode, Shayle talks to Katie MacDonald, co-founder and managing partner at Tailwind. They talk about the areas of application — like wildfire prevention, air filtration, health monitoring, and more — that are attracting the attention of governments, corporations, and investors. But the space is young and still needs metrics and definitions, which is why Tailwind developed a taxonomy of A&R themes and sectors and plans to release an “innovation playbook” with market insights in the fall. 

Shayle and Katie cover topics like:

• Defining the scope of A&R 
• Attracting resilience-curious investors to the space
• The co-benefits with mitigation
• How to measure the success of A&R
• Growing demand signals from governments, such as California’s climate risk disclosure requirements

Recommended resources

• Latitude Media: The 'relentless optimism' of investing in adaptation
• Latitude Media: Adaptation investors are seizing the ‘unavoidable opportunity’‍
• Tailwind: Taxonomy for Climate Adaptation and Resilience Activities‍
• S&P Global: Risky Business: Companies' Progress On Adapting To Climate Change‍
• Bloomberg Law: States Forge Ahead on Climate Disclosures as SEC’s Plan Drags on

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Transcript

Shayle Kann: I'm Shayle Kann and this is Catalyst.

Katie MacDonald: We need a project drawdown for resilience, or we need a speed and scale for resilience.

Shayle Kann: Well, it's the market that we wish just didn't have to exist but does and is actually pretty interesting. It's climate adaptation tech. I'm Shayle Kann, I invest in revolutionary climate technologies at Energy Impact Partners. Welcome. All right, here's how I've always thought about it. If you imagine that it's a zero-sum game in the world, and to be clear, that's not always true. But if you had to decide how much of the world's resources to dedicate toward climate change mitigation versus climate change adaptation, you probably start at the beginning by driving everything you possibly can into mitigation under the thesis that if you're successful, you basically never need to invest in adaptation at all.

But then, assuming that you're not entirely successful and the effects of climate change really begin to strike, of course, then you need to begin investing in adaptation as well. And the further off-track you get, the more you need to shift toward adaptation. So there's some balance at any given time. The worse we're doing on mitigation, the more we shift toward adaptation. And, of course, this is complicated by the fact that, oftentimes, the investments you might make in the technologies to mitigate climate change may also have benefits as far as adaptation and resilience go. And vice versa, you can invest in stuff for the purpose predominantly of adaptation that is also going to help with mitigation.

But regardless if you think of them as a sort of push-pull, I think it's kind of an interesting theoretical exercise. The more practical one, though, is right in front of us right now, which is, if you are a climate tech investor or aspiring entrepreneur, how should you be thinking about adaptation and resilience? And honestly, what technologies and categories actually comprise adaptation and resilience? Is it everything? Is it nothing? Is there a way to define this such that we can track it as its own investment category alongside climate change mitigation?

So that's the question at hand, and it's the one that has led Katie MacDonald, who's today's guest, to shift her focus entirely into, as she calls it, adaptation and resilience world. She's the co-founder and managing partner at Tailwind Climate, which is an investment firm focused on this category. And because it's such a new category, she's also doing a lot of work trying to help the ecosystem define itself. So spoke to her a lot about what is adaptation and resilience from a tech and investing standpoint and what are the areas within that market that could be investable. Here's Katie. 

Katie, welcome.

Katie MacDonald: Thanks for having me, Shayle. Great to be here.

Shayle Kann: Let's talk about adaptation, climate adaptation, and climate adaptation investing starting with a bit of a definition. I guess when I think about climate adaptation, you can define it so broadly, I think, as to have it lose some of its value. There's some risk of that as we talk about this, and I know you've been spending a lot of time thinking about it. So how do you define what fits into the category of climate adaptation technology?

Katie MacDonald: Great question. So I will first heartily agree with you on this. There are a lot of definitions floating around. There's a lot of confusion. There are also a lot of people that insist on using the term resilience instead of adaptation. So, at Tailwind, we kind of... we believe that these definitions need to be hybridized because being resilient systemically, whether it's ecologically, or socially, or economically, to climate hazards is super important. But you also have to be able to adapt. You have to be able to adjust to those hazards as they occur.

So we created kind of our own joint definition of what we call A&R solutions. So adaptation and resilience solutions. And these, for us, are any products or services that help predict, prevent, mitigate, or enable recovery from climate hazards. And those could be like wildfire, heat, extreme weather, flood, etc. And we think that that allows us to really balance this idea of systemic functional integrity over a long period of time also while recognizing the fact that these systems are actively adjusting to some of these hazards.

Shayle Kann: And some of this stuff presumably overlaps with mitigation too. Maybe a classic canonical example here. Let's just say I put a power wall in my house, right. And I'm in California, so I'm in wildfire territory.

Katie MacDonald: Yeah.

Shayle Kann: That power wall is probably load-shifting me a little. It serves a climate mitigation purpose, depending on how I'm using it, but I'm also probably putting it there to deal with proactive outages that PG&E is going to implement as a result of wildfires.

Presumably, that function is an adaptation function if you believe that increasing wildfires is an outcome of climate change, right. So can you have the same thing be a mitigation thing and an adaptation thing, depending on how it's used?

Katie MacDonald: 100%. I think that this question hits on one of the most exciting things for me having entered the resilience and adaptation space from mitigation is that there are a bunch of different examples of technologies from the mitigation space, like the example you provided of energy storage, that are producing co-benefits. They're lowering greenhouse gas emissions while enabling society to be more resilient to climate change.

So you've got energy storage and microgrids. You could argue that the 4 million or some odd folks that signed on for residential solar in 2023 are absolutely achieving resilience for their homes, you know, like off-grade energy or energy independence. And then you also have stuff like wildfire tech wherein if you're able to prevent a wild land from lighting a fire, right. You're reducing emissions. So you're doing both.

The same could be said for some natural carbon solutions that are enabling soil carbon to just be trapped in the soil instead of release. So we have myriad examples of these solutions producing, and I actually think that if you accounted for all of the incidences of these co-benefit-creating technologies, the numbers, in terms of technologies we see today as being adaptation and resilience, would be far, far higher than we currently know.

Shayle Kann: So that's where, to me, the risk is. As we start to explore the contours of this category, the risk to me is not that we don't find anything that qualifies. It's kind of the opposite. It's that it turns out everything counts.

And then, again, we lose the value of the definition. So is there anything that you think of the people maybe think of as adaptation and resilience that you would say is out of scope?

Katie MacDonald: That's a good question. So I think one funny thing that we struck upon when we started Tailwind is that we would call people, whether they were folks at banks or corporations or the government, and be like, "What do you think about when you think about adaptation and resilience solutions?" And obviously, people are like seawalls. And that's been a kind of funny refrain that we've heard from the broader community.

This is very common that the vast majority of Americans that have been confronted with this concept are thinking about public infrastructure when they answer the question of what solutions might look like in this space. One thing we did at Tailwind, in order to kind of crack open the question you asked and sort of debunk what even falls into this space is we built out an adaptation and resilience investor taxonomy that we actually released earlier this year with support from ClimateWorks. And this is essentially our best cut at a functional worldview that we could use here.

So, for instance, obviously, those of us that have been in mitigation forever are super familiar with the five major greenhouse gas emitting sectors. Resilience has not had any kind of functional breakdown like that. So what we did is we looked at, okay, what are the IPCC goals on this topic? What are the SDGs that relate to climate resilience? We looked at all these frameworks, and we were able to get down to eight different thematic areas that we believe are critical to this space and then 35 sectors that fall underneath each of those functional areas.

Shayle Kann: Yeah, I want to get to that because I think it is a useful frame, and it's useful to think about what fits here. As you said, I live in mitigation world predominantly, and in mitigation world, it's pretty easy to figure out what's going to fit. You go where the emissions are.

Katie MacDonald: Totally.

Shayle Kann: So as you say, that's five... What I described to people, I say, "Decarbonization to a first order requires the transformation of five and a half sectors of the economy." the five that you're imagining, which is energy, transportation, mobility, industry, food and ag and buildings, right.

And that's where all the emissions come from effectively. And then, the half is carbon management, which is a sector we need to basically create from scratch. So that's fairly straightforward because you can look at the pie of global emissions and just break it down according to those categories.

Katie MacDonald: Yes.

Shayle Kann: Tougher to do with adaptation because I guess you have to look through the opposite lens, which is basically where are the impacts, what sectors are the impacts felt most strongly, and thus, where is their technology to be applied to make those impacts less severe? So I don't think we're going to talk through all 35 of the subcategories, but maybe list out the eight core themes, and then we could talk about a couple of them in more detail.

Katie MacDonald: Yeah, that sounds good. So you're exactly right in the sense that, as we're sort of... Our heat-seeking missile in this exercise was definitely not greenhouse gases, right. We're primarily looking at two things. One, where are we going to have major negative consequences in terms of human health, so physical human assets, and then, secondarily, where are we going to have major value at risk when it comes to economic assets? So you could think of those two things as tools that we're using sort of like our metal detector for the major areas we wanted to focus on here.

And to your point about the eight sectors, we essentially landed on the following, ecosystems, infrastructure, social systems, which I'll say includes things like defense and also migration and other hot topics like that, health, which, of course, rarely shows up in the mitigation space as its own call-out, water and sanitation cities and settlements, which includes buildings, industry and commerce and food, agriculture and forestry. So those are hot topic areas, and I'm happy to talk through a few of those.

Shayle Kann: Yeah. Well, why don't you pick... I mean, I guess one of the questions is, okay, so if we're going to define adaptation and resilience as an investment category, right, the same way that mitigation is clearly an investment category.

Now mitigation as well. I've periodically said, I'm not sure climate tech really is a sector. It's just a common theme amongst a bunch of different sectors. That's probably true of adaptation resilience too. But to the extent that we're going to group it as an investment category of those themes, where do you see most of the investment dollars going so far?

Katie MacDonald: That's a great question. So I'm happy to talk a little bit more about the different demand factors that we're seeing because one of the reasons we started Tailwind is we were like, "Wow, there is so much latent demand from governments and corporates. Why is that signal not super clear to investors and startups?" So talk a little bit about what we're seeing there, and then I can get further into kind of why that demand should exist and does exist.

But yeah, in terms of what we're seeing, I mean, this is not going to be particularly shocking to you having been in the space, we see a lot of individual investment ecosystems that have popped up over the years to tackle innovation within ag, within health, within water, within infrastructure, like each of those communities has its own sort of freshly minted investor crew and posse and ecosystem that comes with it.

And what we're seeing is that some of those communities, like the health tech community, are getting what we call resilience curious. So they're starting to look at new vector-borne illnesses, or they're starting to look at heat as a serious new disease, chronic disease, and they're extending the work they've done around regular health tech into those spaces. And as I'm implying, the same can be said for ag in a lot of respects.

What we're not seeing is we're not seeing actually most of the climate investors that are already in the space meaningfully pivot into these different themes. So for instance, we looked at 150 different portfolios within the climate tech VC space. So you could say that's the large majority of the investors out there. And we found that 19 of those 150 climate tech investors were totally resilience curious.

They had the word resilience or adaptation all over their websites, but in terms of actual evidence of companies they'd invested in, we couldn't really find anything. And today, when we look at, okay, who is absolutely overtly crushing it from a climate tech space perspective? There are only about eight different firms that are meaningfully leaning in on some of these themes.

And so what that's led us to believe is, okay, if you are a subject matter expert as an investor in one of the thematic areas I'm mentioning, you probably have a significant grasp about what's the writing on the wall and where should we be headed for the next generation of water tech or whatnot. But if you're a pure-play climate investor, you have yet to realize that you have resilience in your portfolio, and you probably don't yet have a strategy to address the emerging opportunity.

Shayle Kann: Yeah, I would say speaking personally, right, I'm a predominantly mitigation-focused investor, as we mentioned, and I've periodically looked at my own portfolio and said, "Hey, I'm kind of a resilience and adaptation investor. I've got stuff in there that..."

Katie MacDonald: Totally. TransEra.

Shayle Kann: TransEra, Form. There's a bunch of stuff that fits the bucket, but it wasn't a deliberate thing because my job is to invest in mitigation for the most part. And so, it's I've sort of... I've become an accidental adaptation and resilience investor to some extent. My suspicion is that's true of a lot of funds, and I know some are starting to think a little bit more about it, but to some extent, it's sort of what you said. People haven't really put in enough deliberate thought to figure out what it really means and what it should entail.

And some of the categories, as you said, are ones that are not really covered in traditional climate. Tech health... Personal health tech is a perfect example where it's a high barrier to entry, I think, for climate tech investors because we know what we're smart in, or at least some of us do, and we know we're not. And I, for example, am not smart in health tech. It's not an area that I've spent a lot of time in.

There are a lot of smart investors focused on it, and so I'm careful not to get out over my skis in new sectors. So it's interesting to think about that overlap where actually it turns out it might be easier in some of these cases for your generalist fund or your health-focused fund to become a climate adaptation investor, at least in that category, than it is for your climate tech investor to become your climate adaptation investor in that category.

Katie MacDonald: Totally. Totally agree with you. It's so funny because it's like in the health space, let's just take that as an example, you've got your drivers of chronic and acute disease, whether that's respiratory illness or cardiovascular, and there's just... or vector-borne illness or water-borne illness, all of which are going to spike due to climate change.

And there's no question that the climate tech community is totally not best placed to take advantage of solutions that will address those. However, then you've got these enormous physical risks that hospital systems and medical facilities face, and it's when you look at these risks, you're like, "Okay, so let me get this straight. You need to harden your physical environment.

You need to upgrade your HVAC so it's capturing small particulates that are not going to make people more sick. You need to island this facility from an energy standpoint." These are all things that climate tech investors are totally expert in. So it's like we got to weed out where we can meaningfully contribute based on adjacent possible versus where we need to step away and let other folks move in.

Shayle Kann: Can I ask you a broader question, which is not so much to the question of is this an investment category, but more is it a good investment category, which is, I think, the fundamental challenge, as I think about it, with adaptation investing is the time horizon. We know climate change is coming and getting worse, but it's coming over a fairly extended timeframe, and what you want is to invest in things that are going to return capital on a venture capital time horizon.

And there's always been this bit of a mismatch. I think about it, particularly in sectors like climate risk analytics, right, which it's been this little subsector, and there has been some adoption, I think of those technologies and those products, but it's not a huge market yet.

And I think one of the reasons for that is even catastrophe modeling and stuff like that we're working on one to five-year time horizons, typically, but climate change, really the big effects are felt over a longer time period, and I think that applies fairly broadly as well. So how do you think about the, in general, finding investable categories where you can imagine the inflection point for a product or a technology taking place faster, perhaps, than the inflection point of climate change?

Katie MacDonald: Such a great question. So I'll say where this is concerned, I think there are kind of two major buckets. There's the sort of bleeding edge side of things, which is where is stuff being adopted right now and where are there venture size returns right now? And as you pointed out, that's totally in the climate risk and intelligence and analytics space, and that's been in part driven by the massive crisis the insurance space has been in. We've just seen absolutely insane losses.

We had 100 billion worth of insured losses in 2022 in this country alone, and we know that insurers are exiting markets, they're increasing premiums, they're lowering coverage. It's a total five-alarm fire right now. And so both those insurance firms as well as the most highly exposed industries, utilities being a critical example, they need these insights into how do we leverage the best geospatial data and other data platforms to determine where are our assets at the highest risk and how can we determine our own internal risk thresholds based on that high-quality climate data?

So we see companies like Jupiter and Climate X and First Street really taking advantage of that house-on-fire demand. Then, in terms of reaching the inflection point across some of these other themes, at least even in the last 12 months, Shayle, what we've seen is that the demand signals from corporations and government are starting to... I would say they're approaching a rolling boil. They're not at house-on-fire levels yet, but they're indicating to us, "Okay, these entities are about to become adopters of hard tech and intelligence, that they have a vested interest in scaling ASAP."

And just to give you a sense of some of that demand kind of broadly speaking. Of course, across corporations and financial institutions, we have SB 261, which is California's climate risk reporting rule, which is the equivalent of what the SEC has essentially threatened to pass, which will come into effect in 2026. So what that means is we've got all these different corporations and financial institutions scrambling to understand their risk and not only understand it but to figure out how are we going to plug the hole?

How are we actually going to acquire hard tech that's going to enable us to lower or mitigate these risks? And so we're seeing a lot of writing on the wall that leads us to believe that corporations are going to be really in the hot seat as buyers in the coming years.

Shayle Kann: How do you think about... I'm staying on this sort of climate intelligence and climate risk category for a moment. I know one of the challenges in the emergence of that sector has been you have really long-time horizon feedback loops. So knowing whether a given model or risk framework is correct is kind of difficult. And there's even been some reporting recently that a couple of the major models differ from each other substantially on key questions of how high is the risk for wildfire in location X or whatever it might be.

And again, for me, this time horizon thing, I feel like it's a fundamental challenge for the adaptation world. There are cases where there are exceptions there, right. So if you're in Texas and the solution you're considering adopting is a microgrid or backup power or something like that, clearly, that's immediate for you. You've had recent outages and freezes and hurricanes and all that.

But in the things that really we're talking about, this is going to play out over 10, 20 years, one, I worry that the planning horizon of a lot of actors, a lot of corporates, investors, et cetera, just isn't that long. And two, that we won't know whether it worked until much, much later in the future, and thus trust in those products and markets and services and analytics is tough to achieve.

Katie MacDonald: Definitely. Yeah, I mean, one study that I think captures kind of the reality here, which totally validates what you're saying, Shayle. In a lot of ways is like S&P Global did this risky business report on the state of corporate action, the space they looked at well over 6,000 corporates, and out of those 6,000 corporates or so, only 21% even had adaptation plans. And within those plans, only 50% were going to do anything before 10 years from now. So I think you're right on one side and that people are hedging. They're like, "How long can we wait to afford to... How long can we afford to do nothing on this essentially?"

And human nature dictates that people will wait. But on the other hand, you've got highly exposed industries like utilities, which I'll come back to, transportation, mining, construction, real estate. Much like this situation with insurance, these issues are today's issues. Like real estate, for instance, across the country, their insurance rates have risen 108% over five years. This is a space where commercial real estate owners and operators are seeing their assets absolutely trashed by climate change.

So they have a reason to act. Utilities. If you look at PG&E, they increased their wildfire budget by 4.9 billion between 2021 and 2023. So house-on-fire problem, right. You look at transportation. I don't know if you remember when that huge ship was stuck in the Suez Canal, and we lost $60 billion worth of global trade. What's happening in the Panama Canal due to drought? So you can see the places where it's like, if there isn't a solution, now tens of billions of dollars are going to be lost. So we do see these corporate leaders stepping forward and taking action.

Shayle Kann: Can we talk for a minute about water tech? You mentioned water a couple of times. I've been meaning at some point to both do an episode on it and just generally get smarter about it myself because it's this adjacency to what I've spent my whole life focusing on, but I've never really dug in to it. It seems like it's... Correct me if I'm wrong, it's sort of... you think of it as a core category within the adaptation and resilience world.

Katie MacDonald: Totally. Yes, we do. We think of it as sort of like water and sanitation, but I can get into that more.

Shayle Kann: Interesting. Okay. And sanitation. Yeah, I mean, what's the state of that market from a tech and investment standpoint?

Katie MacDonald: Yeah, so I will say we're really fortunate to have a few of the investors that have been very loud and proud on adaptation and resilience be water investors. We've had Burnt Island Ventures and Mazarine Ventures step forward and talk about what are some of the ways in which the world is changing that is going to have to result in all sorts of innovation on water.

I think that from a demand standpoint, when I back in my Cleantech Open days, I remember trying to drive the conversation forward on water, and someone came up to me from one of the large EPC firms and was like, "If you want to change water, you're going to have to rely on resignations and funerals," I think, he said, just because it's such an entrenched intense incumbent space. So, obviously, the most movement we've been seeing in this space has probably been on the supply side.

There's been a lot of work to try to conserve the water that exists in systems, whether it's on the public side or agriculture, and that's where a lot of software and IoT has been used. One cool emerging trend is we've been seeing a lot of companies look at air-water capture. Aquaria and SOURCE are good examples of that. And then we've also been seeing some bright spots around reducing the energy intensity of desalination.

But yeah, once again, until we see some really strong signals from buyers that they're willing to fund some of these more advanced systems that move beyond IoT and software and really get into large kind of economies of scale type water solutions, I think it's going to be one of the more expensive spaces within adaptation and resilience to scale, even though we have seen probably more action on water than most of the other thematic areas I mentioned.

Shayle Kann: Yeah, I wonder a little bit whether the buyer side of most water tech ends up being government because the government provides water, or it's supposed to be universally provided. There are exceptions to that.

Obviously, there will be corporates who need to purchase their own water, and there's desal plants in Chile that are there to serve mining companies and stuff like that. But I wonder whether... One of the things that's happened in the past few years in venture world is that defense tech has become a super hot category-

Katie MacDonald: Totally.

Shayle Kann: ... with lots of evidence that there are venture-grade returns to be had there. And obviously, the defense department is its own thing, and it's not totally the same, but it has created a really clear example of a like market wherein the government is the end customer, exclusively the end customer in that case, where there are venture-grade returns to be had.

And I wonder whether there's something to be learned from that in other categories, which you mentioned infrastructure in cities also similar kind of thing. You've got a really heavy government presence on the buyer side there. So maybe we can learn something from how defense tech has been built to figure out how to break through some of the walls that have made these categories, water being included there, considered to be uninvestable historically.

Katie MacDonald: Absolutely. No, I think that that's a really, really good point. It was so funny because I found myself last summer, Shayle, at the DoD's Climate Resilience Forum, which, if anyone is curious about that, please holler at me. But basically, it's like a 3000-person conference that happens every year, and it's all the folks that run the military bases and installations across the country coming together talking about how the hell do we make sure that these assets are hardened and we have mission preparedness across the military.

And to your point, the defense department has done an outstanding job of prioritizing this work of investing directly in solutions that can make sure that those facilities are protected. And that's, in part, because we've seen some military bases in the country wiped off the map because of major storms like Tyndall Air Force Base during Hurricane Michael in 2018.

But I think it is an absolutely great example of a place where the public sector is leading on climate adaptation and resilience and through acquiring all sorts of stuff from novel personal protective equipment that enables folks to train in the military during extreme heat, all the way to distributed energy resources for installations overseas.

This is a part of the public sector that's going to rapidly lower the cost of stuff that regular civilians need, and that could extend to stuff like detection of vector-borne illnesses or other illnesses or biometric sensors that detect wet bulb temperature in preemies in the hospital. It could be any number of things just like we've seen them produce other services like the internet and MRIs that have impacted the whole population.

Shayle Kann: I'm curious how you think about measurement and what defines success in adaptation world. Obviously, in mitigation, in principle, it's pretty straightforward, right. I always say this. If you can measure it in tons of CO₂ equivalent, then it's definitely climate tech, but I don't know exactly what that would look like in adaptation resilience.

Is there a way... Presumably, you can... at the macro level, you can compare to some counterfactual and say, "What was the impact on GDP or human health of having a bunch more of X product out there?" But presumably, you're thinking about measurement of success here and probably have to define it to LPs and so on. Are there metrics that you think we can use?

Katie MacDonald: It's a great question. So I will say that, generally speaking, you could think about measuring, or at least this is how we think about it right now. You could think about measuring adaptation, first of all, as a very spicy meatball to your point. No, just to be clear, no answer exists. No one has kind of a monopoly on this space yet, and I think it's a really important place that we need to come together on as an ecosystem. You could think about it in two different areas. One is value at risk, and where that's concerned in terms of quantifying what happens to this data center, what happens to this community space, what happens to this group of people if the worst occurs?

That is something that, to varying degrees, is difficult to quantify, but you can quantify, especially when it comes to economic assets. And there are a lot of different engineering firms like RWDI and Arup and others that are stepping in to provide some of those calculations that I think the broader investment space will probably end up using and that [inaudible 00:30:08] will do more work on. And then you have this squishier idea of how do you ensure adaptive capacity. So there's sort of a little continuum. This is what UNEP says about measuring adaptation, that you could have absorptive capacity, which is basically the lowest bar.

Are you coping with this stuff at all? Are you making incremental adjustments? Then you can have adaptive capacity, which is like, are you actually adjusting in earnest to the things happening in the environment? And then, on the really ambitious side of the spectrum, you have transformative capacity, which is, are we making structural changes that inherently increase our ability to be resilient on an ongoing basis? And we have done a very bad job to date as a community defining what does that continuum look like from a measurement standpoint.

And this is where I think that just to get on my soapbox, I think what we need to do here, and we're committed to pushing on this at Tailwind, is we need a project drawdown for resilience, or we need a speed and scale for resilience. That's what we need, honestly, because we need the objectives and the key results here that are laid out in a way that reflects all the nuance and complexity of the space and allows us to kind of properly answer your question if that makes sense.

Shayle Kann: I agree, and I think it draws back to the first question of what counts as adaptation because I think there's something here, right, and I think it's really interesting to draw across these seemingly disparate categories and look at what happens when a hurricane hits a military base over here and what happens when workers who are working outside are experiencing increasing heat over here, different things, but all of a kind and that they're impacted by climate change.

So I think there's value in that, but I agree that it needs to be well-defined, or it's going to just kind of float out into the ether and never become its own thing. Particularly if we think that if the thesis, and presumably this is your thesis, is that with proper definition, this is a really attractive investment category.

Katie MacDonald: Totally.

Shayle Kann: Right. Then, it really needs to be well-defined, and the opportunity set needs to be clear. And then people can go after it, and money can be deployed toward it and allocated from whomever is interested in it.

Katie MacDonald: 100%. Exactly. Just to drill into that point, you're making further Turner Construction, which has really been on the leading edge of looking at how does adaptation and resilience need to impact our operations, they have had a variety of different construction projects in really hot parts of the United States.

And because of that, they conducted this really forward-thinking study last year in Kansas City where they had 33 construction workers on one of their sites swallow these little basically biometric pills that were collecting their internal body temperature over the course of 24 hours, and they were able to determine what percent, it ended up being 43%, of workers on the site had internal body temperatures that were well above 100 degrees and could lead to sustained health impacts.

That is so tangible now to them having done that measurement work, they understand who is at risk, they understand what they can do to address that risk, super cut and dry, despite the fact that, of course, it will require investment in action. Meanwhile, on the other end of things, it's like California's trying to ensure wild lands and ecosystems to try to obtain resilience benefits. How easy is it to measure the presence of a resilience benefit or a reduced storm surge if you invest in a few miles of grassy swale? You know what I mean? It's like these things are completely different.

Shayle Kann: Right. All right. This was a great intro to A&R you call it.

Katie MacDonald: Yeah.

Shayle Kann: Adaptation and Resilience. Okay. We're going to popularize that term, so-

Katie MacDonald: Love it.

Shayle Kann: ... great. A&R one-on-one here. I think we should do it again at some point and really dive down into some of these categories a little bit more, particularly some of the ones that don't obviously overlap with climate tech world, because that's what the folks like me have the most to learn about, but in the meantime, appreciate the walkthrough, and we'll do it again.

Katie MacDonald: That sounds great. Thank you, Shayle.

Shayle Kann: Katie MacDonald is the co-founder and managing partner of Tailwind Climate. This show is a production of Latitude Media. You can head over to Latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures.

Prelude backs visionaries accelerating climate innovation that will reshape the global economy for the betterment of people and planet. Learn more at Preludeventures.com. This episode was produced by Daniel Woldorff, mixing by Roy Campanella and Sean Marquand, theme song by Sean Marquand. I'm Shayle Kann, and this is Catalyst.