Islands are the single most vulnerable group of jurisdictions to climate change globally, despite contributing less than one per cent of global greenhouse gas emissions. Rising seas, stronger hurricanes and heatwaves are already affecting lives and economies.

While this is now well known, what gets less attention is that, despite being on the front line of climate impacts, islands also have the potential to lead in developing, testing and scaling the solutions the world will need to adapt to climate change — and this investable market is estimated to reach $10 trillion by 2050.

As the physical impacts of climate change escalate across critical systems, from energy to healthcare to food security, climate adaptation innovations, such as weather intelligence, early warning systems, cooling solutions, water management systems or parametric insurance products will become increasingly necessary.

Bermuda holds a strategic advantage: it is home to one of the world’s most advanced insurance and reinsurance sectors. This positions Bermuda to lead in climate risk finance innovation, developing parametric insurance products, catastrophe bonds and resilience-linked instruments that can be exported globally.

Why adaptation matters

Adaptation as an opportunity was a central topic at COP30, considered the world’s most influential climate summit, which concluded last month in Belem, Brazil and which I attended.

With more than 50,000 delegates from 193 countries, COP is more than a climate conference; it is a global negotiation shaping tomorrow’s economy and determining where trillions in investment will flow, offering signals to attentive governments and businesses.

The message there was clear: climate adaptation is not just a necessity; it’s an opportunity. Adaptation not only reduces risk, protects people and GDP, but it also creates new markets.

Adaptation as smart economics: reducing risk

The world was watching as Jamaica reported more than 50 deaths and more than 30 per cent of GDP in losses in the aftermath of Hurricane Melissa, providing a stark reminder of the human and financial costs of climate change for islands.

The $90 million-plus parametric insurance payout from the Caribbean Catastrophe Risk Insurance Facility (CCRIF) triggered under Jamaica’s tropical cyclone policy was also a reminder of the benefits of planning ahead.

Contrary to general belief, climate change does not only affect plants and animals. It actually affects humans first.

We already know of effective and low-cost adaptation initiatives, which are being rolled out globally.

Building on the Emergency Measures Organisation’s current operations, imagine if Bermuda residents received automatic heatwave or other extreme weather events alerts via texts or AI-generated phone calls, making sure they get accurate and timely information and prompting them to seek shelter, or cooling facilities, stay hydrated and thereby reduce pressures on the already overflowing ER.

This is not science fiction. There are now 119 countries globally that have already implemented these types of early warning systems, a 113 per cent increase over the past ten years. They proved highly cost efficient. By giving 24 hours’ notice of an impending hazardous event (heat, storm, etc), we can reduce damage by 30 per cent.

Now imagine if mangroves were planted on our shorelines to reduce the impacts of our rising sea levels on the 2,000 inhabited buildings (including the power plant) at risk of flooding and other damages.

Here again, the numbers show they are cost-effective measures.

Mangrove planting yields a 1.5 higher benefit-cost ratio than hard infrastructure alone. Globally, wave and surge attenuation by mangroves reduces flood protection expenses by an estimated $65 billion annually and could save $71 billion to $168 billion in coastal adaptation through 2080.

Adaptation is smart economics. Studies discussed at COP suggested that for every $1 invested in adaptation, economies and people could gain $10 in benefits.

Beyond reducing risk: tapping into new markets

Islands can be testbeds for climate adaptation technologies and innovations, a potential $10 trillion investable market by 2050, which GIC Private Limited, Singapore’s wealth fund, described as the “inevitable investment opportunity” in a recent study launched at COP.

Frontline exposure to climate creates urgency and drives early adoption of adaptation solutions. With smaller geographies that allow for faster implementation and scaling, some islands are already demonstrating proofs of concept.

From AI-driven forecasting and disaster preparedness platforms in Barbados, to solar-powered desalination systems to secure water supply in the Maldives, to upgrading community buildings and homes in Antigua and Barbuda, locally led climate change adaptation solutions are already emerging – they now need scaling.

Overcoming the financing barriers

Testing and scaling these adaptation solutions requires capital and islands are taking steps to mobilise it.

Many are conducting climate risk assessments and drafting national adaptation strategies to prioritise investments where vulnerabilities are greatest. Seven Caricom countries now have national adaptation strategies and all 13 Caribbean Small Island Developing States (“SIDS”) include adaptation measures in their climate plans.

Beyond domestic funds, access to international financing remains a challenge. Mechanisms such as the Green Climate Fund and the Adaptation Fund were designed to support vulnerable jurisdictions but islands often struggle to tap into them. Bermuda and other Overseas Territories face an additional hurdle: ineligibility for these facilities (since they are not developing countries in the United Nations system), as highlighted by former Minister of Home Affairs Walter Roban during an event at COP30 organised by Islands Innovation.

Historically, adaptation has been viewed as the sole responsibility of the public sector. Considering the expected rise in demand for adaptation technologies and solutions globally (both established and emerging), that mindset must change, and private investors should see this funding gap as an opportunity.

COP30 showcased island leadership in innovative financing models that blend both public and private resources. Barbados shared lessons from debt-for-nature swaps and the creation of its Blue-Green Bank, building a financing ecosystem for climate innovations.

Other Overseas Countries Territories (OCTs) are also innovating. The British Virgin Islands’ Climate Change Trust Fund, seeded through tourist levies, is the first of its kind among OCTs. It provides direct access to climate finance and reduces reliance on international systems. Regional partnerships and locally led financing mechanisms like these can attract private capital and accelerate adaptation.

Adaptation is smart economics, and strategy

For islands, adaptation is not charity, it’s strategy.

For governments, it’s not a sunk cost but an investable opportunity to increase resilience and protect communities.

For private investors, it’s a $10 trillion market in climate adaptation solutions, from risk finance instruments to resilient infrastructure and nature-based systems.

Bermuda is uniquely positioned. With world-class insurance and reinsurance expertise, it has the tools, talent, and the trust of global markets to lead. What’s needed now is bold leadership and private sector engagement to turn resilience into a competitive advantage and capture a share of this investment opportunity, while benefiting all our futures.

∙ Charlotte Reboul Paradis advises on advancing inclusive, resilient and sustainable development. She is senior manager, policy, sustainability and healthcare with KPMG Islands Group's advisory team, based out of Bermuda