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The US military defines a complex catastrophe as a “natural or man-made incident...that results in cascading failures of multiple, interdependent, critical, life-sustaining infrastructure sectors and causes extraordinary levels of mass casualties, damage, or disruption severely affecting the population, environment, economy, public health, national morale, response efforts, and/or government functions.”1

Working with Wellington’s Climate Research Team, our Global Macro Team studies the macro, market, and geopolitical implications of climate change. We see climate change as a complex catastrophe in the making, with the potential to exacerbate geopolitical instability and multiply threats to economic and national security. Governments, including the US, China, and European Union, are beginning to treat climate change as a structural peril. Under the Biden administration, climate change has become integral to domestic and foreign policy narratives. Pentagon spending is shifting, with more contracts dedicated to climate-threatened US military infrastructure globally. 

Domestically, the geopolitical downsides of climate inaction are so great that bipartisan policy agreement may be possible. Outside the US, Biden’s climate strategy could lead to cooperation and conflict. The stakes are high. FIGURE 1 shows the US Department of Defense’s (DoD’s) projections for global climate security threats under our current pathway of a 2°C temperature rise. Not given to hyperbole, the DoD identifies “catastrophic” situations in most regions.  


US Military Sees Climate Change as “Catastrophic”   
US Department of Defense’s “Climate Security Threat” profile for a 2°C+ warming pathway

Source: US Department of Defense, The Center for Climate & Security

We have uncovered myriad macro and market implications that should continue to take shape as the world addresses climate change. 

Adaptation Solutions

Expect increased investment in climate adaptation, as governments, businesses, and individuals spend vast sums of money to cope with negative impacts. Adaptive innovations such as seawalls and other barrier infrastructure, large-scale heating and cooling, battery storage, grid and utility upgrades, resilient road- and rail-surface materials, among others, are needed. These solutions may help to reduce political stress, prevent mass climate migration or resources wars, and improve safety and living standards in communities with exposure to climate risks.

Expect robust defense spending globally: No country will want to weaken its ability to respond to physical effects of climate change.

Defense Spending 

Expect robust defense spending globally. Military solutions are seen as necessary to position countries for a deteriorating geopolitical backdrop, and military installations and equipment will need to be upgraded to protect property and personnel from the physical effects of climate change. No country will want to weaken its ability to respond to these challenges. I believe spending will go to defense applications (with an emphasis on “dual-use” technologies with both military and civilian applications), and to new infrastructure spending. 

Renewable Energy and Fossil-Fuel Reduction 

The US military is the world’s largest petroleum consumer. Government spending on renewable energy applications to reduce fossil-fuel dependence should increase significantly. Investment in autonomous and electric vehicles across the US military’s global fleet is also expected to be an important part of the climate-adaptation strategy.  


Competition Over Resources

While climate change is a global phenomenon, the regions 30° north and south of the equator—home to key emerging markets and geopolitical hotspots—face acute risks. Water scarcity along the India/Pakistan and China/India frontiers could escalate to conflicts over water rights. In the South China Sea, territorial disputes about resources as varied as fishing stocks and energy could prevail. Farther afield, melting sea ice in the Arctic Circle could lead to skirmishes over energy stores and trade routes. 

We believe the intersection of climate change and national security is in its early stages. Climate concerns will likely influence policy, defense spending, and the geopolitical landscape, including the great-power struggle between the US and China. 

View additional insights about climate change in Market Perspectives.


1 US Department of Defense Dictionary of Military and Associated Terms. 

Important Risks: Risks of focusing on investments that involve sustainability, environmentally responsible, and climate focus investment criteria may influence investment performance and increase risks related to downturns or other adverse developments in that market segment.

The views expressed herein are those of Wellington Management, are for informational purposes only, and are subject to change based on prevailing market, economic, and other conditions. The views expressed may not reflect the opinions of Hartford Funds or any other sub-adviser to our funds. They should not be construed as research or investment advice nor should they be considered an offer or solicitation to buy or sell any security. This information is current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management or Hartford Funds.


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Geopolitical Strategist


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