This article first appeared in Forum, The Edge Malaysia Weekly on August 3, 2026 - August 9, 2026

Floods have accounted for 85% of all natural disasters in Malaysia since 2000, but the frequency per year is growing, and so too are the financial costs. Estimates from the Department of Statistics Malaysia suggest that annual flood losses have risen steadily from RM622 million in 2022 to RM933 million in 2024.

There is an urgent need to build adaptive capacity and invest in resilience through a people-centric lens.

Malaysia is currently developing its National Adaptation Plan (NAP). In this process, it is important to prioritise the people most exposed to climate risk. This refers to “just resilience” and it is the lens the NAP needs at the heart of its design.

Climate impacts fall hardest on vulnerable groups, lower-income households, informal and migrant workers and marginalised communities. High social vulnerabilities such as inequality, weak safety nets and unstable employment amplify those impacts. Without integrating both physical and social dimensions, efforts to reduce risk in one place can simply displace it to another.

Resilience must therefore be designed at both the asset and community levels and integrated systemically.

Physical risks are costly systemic risks that will only compound with worsening climate impacts. Institutional investors in the Asia Investor Group on Climate Change’s (AIGCC) network see both physical climate risk and just transition as increasingly material issues that would detrimentally affect businesses and economies if not managed properly.

For example, climate hazards are already costing Asia’s major electricity utilities US$6.3 billion (RM25.77 billion) annually in asset damage and lost revenue, and these costs will increase by 33% by 2050 — US$8.4 billion annually — under a medium-high warming trajectory if adaptation measures are not put in place.

Beyond the direct costs to utilities, disruptions to electricity generation due to climate hazards can cascade across supply chains and risk imposing costs on businesses and communities that depend on reliable and affordable energy supply.

The World Bank further estimates that Malaysia had lost around RM27.8 billion of gross domestic product between 2015 and 2024 due to the impacts of floods on business revenues and labour productivity. And, projecting ahead to 2050, heat stress could lead to annual productivity losses of 5% in the agriculture sector, 2% in the industrial sector, and 1.5% in the services sector, relative to today’s baseline.

Resilient and productive economies are key to investors’ ability to generate returns for their stakeholders. However, unpredictable disruptions in asset- and workforce-level productivity due to climate hazards undermine this.

In some good news, investors are building foundations to understand and better engage on these issues.

AIGCC’s 2026 State of Climate Investor Transition Report found that: 77% of AIGCC members have a full or partial strategy focused on physical risks (compared with 52% of investors overall); and 56% have a full or partial strategy on just transition (compared with 21% of investors overall).

Some investors are also beginning to develop products and strategies that integrate just resilience principles. Schroders developed an engagement toolkit for investors to integrate just resilience — specifically heat stress — into their engagements with the apparel sector across Asia.

Link Asset Management ran a sustainability-linked insurance pilot with AXA to make one of their commercial properties in Hong Kong more climate resilient, with reduced insurance premiums as an incentive for concrete resilience measures implemented.

On the insurance side — In India, People’s Courage International has been working with two insurers — K.M. Dastur Reinsurance Brokers and Go Digit General Insurance — to pilot a parametric heat stress insurance product for informal workers in Delhi-NCR and Lucknow. Payouts for workers are triggered when temperatures breach a set threshold for five consecutive days and enable affected workers to invest in preventative measures (for example, cooling solutions, hydration aids and basic medicines) to prevent them from getting sick and missing work, leading to benefits for workers and employers.

However, financial institution action on climate can only go so far without coordinated policy frameworks and system-level action. Without these, only a handful of communities, assets and sectors will see the benefits.

Investors take a long-term, systems-level view. As just resilience becomes more material, investors will expect corporates to address both the physical and social dimensions of climate risk.

That means disclosures covering impacts on workforce and community resilience, protections for workers exposed to climate events alongside concrete mitigation measures and transition plans grounded in just resilience.

Companies need to start assessing their exposures so they can be prepared for these discussions.

At the same time, investors are looking to policymakers to build the enabling environment for just resilience investments. They are bringing it to the NAP developments underway across Asian markets, including Malaysia.

Their message to policymakers is consistent: coordinate across sectors, agencies and stakeholders, and prioritise the most vulnerable systems, groups and communities.

That is what unlocks the economy-wide benefits and the returns on their investments.

This involves integrating social dimensions and adaptation into existing sustainability taxonomies, with clearly defined activities that signal what good practice looks like; developing investible and equitable national adaptation plans; and ensuring better alignment between social protection systems and climate plans for effective place-based just transitions.

In Malaysia, the NAP is currently under development, and investors see an opportunity to engage policymakers on the following policy asks:

● Ensure sector-level adaptation plans pass a just-resilience test covering workers and vulnerable communities;

● Embed adaptation criteria with social co-benefits in Malaysia’s sustainable finance taxonomy;

● Develop a pipeline of just-resilience aligned projects in consultation with investors to support clarity and visibility over just-resilience investment opportunities; and

● Align the NAP explicitly with the Nationally Determined Contribution 3.0, National Energy Transition Roadmap and the 13th Malaysia Plan’s social inclusion priorities.

Early investor action shows promise, but it will scale only through structured engagements and alignment with companies and government ministries as part of a coordinated system.

Malaysia’s NAP presents a timely opportunity to embed just resilience principles at the heart of Malaysia’s climate adaptation strategy, and to bring institutional investors in to mobilise capital and unlock the full social and economic benefits.

Rebecca Mikula-Wright is CEO of Asia Investor Group on Climate Change (AIGCC), an initiative to create awareness and encourage action among Asia’s asset owners and asset managers about the risks and opportunities associated with climate change and low-carbon investing. Martina Chow is a policy analyst with AIGCC’s Just Transition Working Group.

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