This blog post examines recent commentary by Jay Koh, a veteran private equity investor and former Carlyle Group executive. Koh is directing capital toward opportunities created by extreme weather and climate volatility.
It explains why Koh believes climate-related risks are now a primary driver of market behavior. The post also explores how a new economy of resilience and adaptation is emerging, and what that means for private equity and long-term investors.
Why extreme weather is now a market-defining force
Climate risk has moved from theoretical to financial. Jay Koh argues that investors today have clearer sight-lines on the trajectory of climate-related impacts than on familiar macro variables such as interest rates or inflation.
That shift alters how capital is allocated. Rather than treating climate as a peripheral ESG checkbox, markets are pricing in resilience, adaptation and volatility management as core investment criteria.
This change is structural, not cyclical. As extreme weather events become more frequent and costly, the demand for assets and services that reduce exposure or transfer risk will grow across geographies and sectors.
The components of the “new economy” around extreme weather
Koh describes a broad suite of opportunities spanning physical infrastructure, enabling technologies, and financial instruments designed to manage climate volatility.
Investors are looking beyond single-asset plays to systems that increase overall resilience and reduce systemic risk.
These categories are interdependent. For example, better climate data and modeling (technology) make insurance products more accurately priced, which in turn makes financing resilient infrastructure more viable.
What this means for private equity and institutional investors
Private equity is increasingly treating climate as an investment thesis rather than a compliance exercise.
Koh’s strategy reflects a broader industry move: funds are allocating capital to businesses that build resilience, retrofit assets, or license technologies that mitigate the economic impacts of climate shocks.
Investors who ignore this trend risk stranded assets and underperformance. As regulatory frameworks, public sentiment, and physical impacts evolve, traditional valuations that omit climate exposure will become less reliable.
Conversely, portfolios that integrate adaptation and volatility management stand to capture durable, growing demand.
Practical steps for positioning capital
Adapting to this new investment landscape requires deliberate changes in due diligence, portfolio construction, and post-investment management.
A few pragmatic steps can help institutional investors and PE managers act on the thesis Koh articulates.
How to implement a climate-centric investment approach
Start by stress-testing assets against plausible climate scenarios. Integrate forward-looking risk metrics into valuation models.
Allocate a portion of dry powder to resilience-enhancing assets and technologies. Focus on those that shorten payback periods under higher-frequency extreme events.
Prioritize partnerships that combine engineering, climate science, and insurance expertise. This helps to de-risk large-scale projects.
Jay Koh’s framing is a clear reminder: climate change is not merely an environmental issue but a central economic reality. For investors, understanding and deploying capital to manage climate volatility is rapidly shifting from optional to essential for long-term financial success.
Here is the source article for this story: The Private Equity Veteran Going All Out on Extreme Weather Bets