How does innovative funding unlock climate?ready infrastructure?
June 04, 2026
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Innovative funding helps communities close the infrastructure funding gap and move climate projects from plan to delivery
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Flooding, drought, wildfires, and extreme storms are no longer rare events. They are ongoing pressures reshaping how communities plan and invest in water systems, roads, campuses, and public infrastructure.
At the same time, very little has changed in the way infrastructure is funded. Grants, ratepayer revenues, and long-standing government programs are vital funding mechanisms. But they were never designed to meet the scale, speed, and complexity that come with today¡¯s climate challenges.
Infrastructure planners, municipal leaders, and advisors are facing pressure. Traditional funding models¡ªsuch as a single government grant or a bank loan¡ªwere not built for challenges at this scale.
When communities rely on these traditional options alone, projects can stall. Costs often rise, and the infrastructure gap continues to widen. A different approach is needed¡ªone that reflects today¡¯s realities and supports long-term progress.
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Extreme storms are now ongoing pressures reshaping how communities plan and invest in water systems, roads, campuses, and public infrastructure.
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A simple but powerful shift: funding as a system
One of the most important changes underway isn¡¯t a new financial product¡ªit¡¯s a new mindset. After working in the banking and consulting fields for over 34 years, I¡¯m excited to see this mindset emerge.
Instead of relying on a single source of funding, many successful projects now use what is often called a capital stack. In plain language, a capital stack is a planned mix of funding tools, each matched to what it does best.
For example:
- Public funding: It supports early planning, feasibility, and infrastructure with broad public benefit.
- Loans and bonds: They finance long-lasting assets that can be repaid over time.
- Private capital: It participates where risks and returns can be clearly defined.
- Insurance and risk-sharing tools: They protect projects from extreme climate events.
When funding is built into project planning and development, and funding sources are deliberately sequenced, projects become easier to finance. They can also be more resilient over time and more appealing to potential partners.
Drawing on research and real-world projects across Canada, the US, and the UK, let¡¯s look at four innovative funding approaches. These approaches are helping climate-ready infrastructure projects move from concept to construction.
1. Coalition funding: Investing together in shared outcomes
Coalition funding brings multiple partners together. They list can include governments, insurers, utilities, investors, Indigenous organizations, and community groups. They invest in shared outcomes such as flood protection or drought resilience.
Instead of asking, ¡°Who pays for this?¡±, coalition funding starts with a different question: ¡°Who benefits?¡± From there, partners align funding, ²İİ®´«Ã½, and governance.
A leading example is the in the UK. Our team has supported the Coalition as a founding member and brought our technical know-how. By bringing insurers, asset owners, public agencies, and those with technical skills together, the Coalition reframes flood prevention as a long-term investment. FloodAction¡¯s investor value proposition promises, ¡°every pound invested delivers many times its value in avoided damage.¡± This is not because of a single project but because incentives are aligned across sectors and scaled across an entire watershed (the land that drains into the same river system).
Coalition funding is powerful¡ªbut it¡¯s not simple. It works when leadership is clear and each contributor¡¯s value flows equitably to both investors and beneficiaries. Without strong governance and coordination, coalitions can fragment.
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In the UK, the FloodAction Coalition reframes flood prevention as a long-term investment.
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2. Incubators and resilience labs: Turning risk into projects
Many climate-adaptation ideas fail to move forward because they aren¡¯t ready for funding. Incubators and resilience labs help bridge this gap.
For example, our team in Canada is working alongside the Co-operators Insurance Resilience Acceleration Lab. The goal is to turn identified climate risks into well-defined, investable infrastructure projects. Here¡¯s how it works:
- Co?operators brings an investor and insurer perspective. This is informed by rising climate?related losses.
- Our team contributes technical, environmental, engineering, and funding?strategy skills.
This helps to make sure projects are both resilient in design and bankable. And that means they are structured, costed, and de-risked enough that lenders and investors have the confidence to commit capital.
In practice, this means working alongside our client-facing teams to surface projects with climate-adaptation elements that may be at risk of stalling due to funding gaps. Our funding team works with those clients to define the gap, structure a proposal, and connect it to financial networks led by Co-operators. The outcomes of these introductions will unfold over the coming years¡ªbut projects that were stalled are already moving forward with guidance from our team, especially where municipal capacity is limited.
" }When communities design innovative funding strategies early¡ªaligning public, private, and risk-sharing tools¡ªthey can move from stalled plans to climate-ready solutions.
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3. Climate bonds: Accessing larger pools of capital
Climate bonds are often called green or sustainability-linked bonds. What do they do? They help governments and utilities raise funds in capital markets for projects with clear environmental and growth-minded benefits.
Our role isn't to issue climate bonds¡ªthat¡¯s the domain of financial and legal specialists. What our funding team brings is the strategic skill to identify when and where climate bonds should form part of a project's capital stack and to help clients navigate the process.
Municipal debt is considered low risk. Investors are often willing to offer lower interest rates and longer repayment terms that better align with the life of the asset rather than traditional 20- or 25-year terms. These types of projects also deliver strong public and environmental value, which many investors want to support.
When used effectively, climate bonds can:
- Raise large amounts of long-term capital
- Attract investors focused on sustainability
- Improve transparency through consistent reporting
They do require strong discipline. It¡¯s essential to have clear eligibility criteria and independent verification. They help maintain credibility and avoid overstating the environmental benefits of the bonds.
4. Catastrophe bonds: Managing extreme climate risk
Some climate risks¡ªsuch as major floods or hurricanes¡ªare too large for traditional budgets to absorb.
Catastrophe bonds and insurance-based tools help transfer these low-probability but high-impact risks to capital markets. While they don¡¯t typically fund construction directly, they strengthen projects by improving bankability¡ªreducing the risk that makes lenders hesitate. They protect public finances and providing rapid access to funds after disasters. ?
Typically, they are linked to specific risk triggers (e.g., flood levels or storm intensity), releasing capital after the event to support recovery and protect public finances. For example, in 2025, TD Insurance issued Canada¡¯s first catastrophe bond. TD Insurance ; it secured C$150 million in protection that can be drawn on if major losses occur.
Think of them as shock absorbers within a broader funding system.
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Climate change is widening the infrastructure funding gap. Communities are turning to innovative funding approaches to help make climate-ready infrastructure possible.
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What this looks like in practice
These tools are most effective when used together.
Across North America, with our help, innovative funding approaches are being used to deliver large-scale climate-adaptation projects. For example, we¡¯ve worked on coastal resilience corridors. These projects often combine federal mitigation grants, public loans, municipal green bonds, private capital, and insurance-backed risk transfer into a single, coordinated funding approach.
In drought-prone regions, groundwater storage and conveyance projects are important. They are being framed as regional resilience and economic stability initiatives. This unlocks coalition-based funding that blends public-benefit grants, long-term public credit, and private investment.
When funding is treated as part of project design¡ªrather than something added at the end¡ªresilience projects move faster and attract broader support.
Why this matters now
Climate adaptation and decarbonization demand infrastructure at a scale and pace we haven¡¯t built before.
No single funding source can deliver this transition alone. But when communities design innovative funding strategies early¡ªaligning public, private, and risk-sharing tools¡ªthey can move from stalled plans to climate-ready solutions. That way, we can start to close that infrastructure funding gap.
Designing these funding systems requires both technical and financial skills. This is where experienced partners can make the difference between a stalled project and one that moves forward. ?
Innovative funding isn¡¯t about replacing traditional programs. It¡¯s about using them more strategically¡ªalongside new approaches¡ªto build infrastructure that is resilient, affordable, and made to last. The tools exist. The question is whether we design them into projects early enough to make a difference. ?
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