It’s Getting Hot In Here… Is Your Infrastructure Ready?

From June 23 to June 29, approximately 160 daily high temperature records were challenged in just a week along the US East Coast – only five days into official summer. The extreme heat extended into the Midwest, underscoring the widespread reach of this event.

Prolonged heat waves are a chronic physical risk of climate change. They strain public health systems, reduce economic productivity and place increasing pressure on the built environment.

The week’s headlines paint a stark picture:

🔥 “US heat wave exposes infrastructure, health vulnerabilities – and it’s not quite over yet” – CNN

🔥 “Dangerous heat wave strains power grid; millions warned of triple-digit temperatures” – USA Today

🔥 “Extreme Heat Is Breaking America” – The New York Times

Reports of roads buckling, power grids failing and public transportation shutting down are clear signs that US infrastructure – as well as global systems more broadly – remain unprepared for the ever-changing, insidious impacts of climate change. Unlike sudden-onset disasters like hurricanes or flash floods, rising global temperatures are a well-documented and long-anticipated consequence. And yet, adaptation continues to lag.

Yes, I may sound like a broken record: 2024 was the hottest year on record. And if current trends continue, 2025 is on track to surpass it. So, the question becomes: with this knowledge, what do we do? Where do we go from here?

We must accelerate the deployment of capital into solutions that help infrastructure withstand a warming, changing world. The global infrastructure financing gap is estimated to be $15 trillion through 2040. Now, resilient infrastructure is rapidly emerging as a key investment theme for asset managers and private equity investors. Why? Because it delivers:

• Risk-adjusted returns.
• Low correlation to traditional fixed income and equity markets.
• Portfolio diversification.
• Direct mitigation of systemic climate risks.

The World Resources Institute analysed $133 billion in adaptation investments, including infrastructure, and found an average return on investment (ROI) of 27%. Over the past five years, resilient infrastructure has outperformed traditional infrastructure by 16%. Adaptation investments also extend asset lifespans. For example, digital infrastructure, such as early warning systems, can detect hazards before they occur and offer benefit-cost ratios of up to 10:1.

It’s not just about performance. Insurers and credit rating agencies are paying attention. Resilience measures, like flood defences, cooling technologies and wind-resistant design, can improve access to affordable insurance and reduce damages. Meanwhile, credit rating agencies are sharpening their scrutiny of infrastructure portfolios. In April 2025, Fitch Ratings released a whitepaper seeking feedback on a proposed framework to formally integrate climate risk into infrastructure and project finance credit ratings.

Adaptation isn’t about just avoiding financial loss but also seeking out opportunities. The adaptation and resilience investment market are anticipated to more than double by 2030. Major themes for investors will be cooling and ventilation, water supply infrastructure, telecommunications, and utilities.

So, to ask again – where do we go from here?

Investors need reliable tech partners to properly assess the physical risk within their infrastructure investments at the location level through various warming pathways. They need partners not only to help them mitigate risks, but also to actively seek out opportunities within the design, construction and maintenance phases. Want to learn more? Watch out for my upcoming Strategic Focus: The Resilience Imperative For Real Assets Investors.