Ten data insights showing the continued rise of climate risk – and what investors should look out for in 2026

2025 marked the continued rise of sustainability risks including weather-related disruptions, infrastructure strains, supply chain vulnerabilities, water scarcity and low carbon technologies deployment. Drawing on Bloomberg’s sustainable finance datasets and Bloomberg Intelligence analysis, this article highlights ten data-driven insights that reveal the impact of climate risks on markets – and are likely to remain relevant in 2026.   

1. Higher climate-related asset-damage risk is associated with higher capital costs

Analysis across thousands of issuers shows that companies with a 10-percentage-point increase in modeled physical asset-damage risk face, on average, a 22-basis-point increase in their weighted average cost of capital, even when controlling for sector, size and geography. 

Relevance for 2026: Lenders and investors appear to be treating severe-weather exposure similarly to other operational risks that influence long-term cash flow reliability. Read more here or visit ESG CLMR on the Bloomberg Terminal.  

2. Adaptation-linked financing remains uneven across regions 

Europe issued over 1,000 green bonds with adaptation-related use of proceeds—ten times the U.S. total—despite Europe showing lower estimated long-term GDP losses from physical hazards. 

 Implications: The disparity may indicate differing regulatory incentives, disclosure expectations or infrastructure financing models rather than differences in underlying risk. 

To explore more project category data for sustainable fixed income, use SRCH on the Bloomberg Terminal. 

3. Water scarcity is emerging as a material constraint for the power sector 

By 2030, 36% of global electricity generation capacity is projected to operate in areas classified as high or extremely high water-stress regions. 

Why this matters: Thermal power generation, agriculture, chemicals and mining are among industries with high reliance on water availability. Water stress can increase operational costs, create volatility in output, and affect long-term capital-planning assumptions. Find out more in the Bloomberg Intelligence ESG 2.0 2026 Outlook. 

4. Companies with higher ESG Scores outperformed on risk-adjusted returns 

Bloomberg’s quantitative research found evidence that firms with higher ESG Scores showed better total and risk-adjusted performance, and that the results were not explained by traditional factor exposures. 

 Context for investors:  The underlying data suggests the scoring framework may be capturing operational discipline, governance quality, or other financially relevant attributes. Find out more here. 

5. More profitable firms were 3.5x more likely to announce net-zero targets 

Data shows that firms with stronger margins were significantly more likely to set long-term emissions targets. 

 What this means: Target-setting appears correlated with financial capacity rather than ideology—companies with more available capital may simply have more room to make long-term commitments. Read the analysis from our sustainable investing quantitative research team.

6. Resilience and infrastructure-preparedness companies outperformed the broader market

The Bloomberg Prepare & Repair Index (BPRAET) outperformed the S&P 500 by 500 basis points in 2025, and by 7.2% annually over the past five years. Constituents include firms involved in maintenance, repair, and emergency-response infrastructure.

 What this means: Recurring weather-related disruptions and aging infrastructure continue to drive predictable demand for repair and preparedness services. Find out more here. 

7. Carbon capture technology gained traction as an investable category 

The Bloomberg CCUS Aggregate Equal Weight Total Return Index (BCCAET) surged 37.6% in 2025, outpacing the Bloomberg World Industrials Index (WLSTI) by 10.9 percentage points.

 Why: Regulatory incentives, industrial-sector compliance needs and early engineering advancements contributed to increased investor interest. Learn more here.

9. Sustainability-aligned funds exceeded $3 trillion globally

Global assets in publicly traded values-based, impact and sustainability-labeled funds surpassed $3 trillion, with Europe accounting for 85% of assets. ETFs rose to 20% of global sustainable fund AUM. 

Investor takeaway: Fund flows reflect regional regulatory structures, product demand, and long-term asset-owner mandates—not a uniform global viewpoint. To explore more trends visit BI ESG on the Bloomberg Terminal.

10. Weather-related economic impacts reached a multi-trillion-dollar scale 

Climate-related disasters have driven $18.5 trillion in global spending since 2000, more than the combined costs of the Global Financial Crisis and the inflation-adjusted cost of the Great Depression in the US.   

Relevance: These figures are material for insurers, municipal issuers, infrastructure planners, and sovereign-risk analysts evaluating long-term fiscal exposure. 

To explore more trends, read Bloomberg Intelligence’s Climate Economy Deep Dive, and Terminal users can visit BI ESG: BI ESG CLIMATEDAM on the Bloomberg Terminal.

What these signals suggest for 2026 

These insights suggest financial markets are responding to measurable risk and performance indicators related to sustainability factors. As physical and transition risks are likely to continue to evolve in 2026, investors should look out for:

1. Greater emphasis on quantifying operational and physical exposure 

Risk managers are likely to continue integrating facility-level hazard data into lending, underwriting and valuation models. 

2. Continued scaling of transition-related technologies 

Carbon capture, grid modernization and long-duration storage may attract capital due to regulatory incentives and industrial demand.

3. Infrastructure resilience as a multi-year investment theme

As recurring damage costs rise, resilience and adaptation spending is likely to continue to rise. 

With Bloomberg’s datasets and analytics, decision-makers have access to objective, quantifiable insights into how sustainability factors affect financial outcomes. Find out more here.