Climate Risk Priorities Have Shifted for Asset Owners
A new survey shows more institutional investors now factor physical climate risks into their portfolio sustainability strategies.
Updated on Sept. 22, 2026 in Investing
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Do you believe investors should prioritize climate risks when making long-term investment decisions?
Asset owners are increasingly prioritizing climate physical risks, with 26% of respondents citing it as a sustainability focus in 2026. This reflects a shift from 2025, when 19% of investors identified these climate factors as a top priority.
Why it matters
Investors are responding to growing evidence of the material impacts climate change may have on asset values and long-term returns. This trend is causing more owners to adjust how they integrate sustainability considerations across their holdings.
A survey of 402 asset owners across 24 countries found that 26% now identify climate physical risk as a sustainability priority, up from 19% in 2025. Over 50% of these investors now apply sustainability considerations to more than half of their total assets.
The players
FTSE Russell
An index provider that creates and maintains benchmark indices used by investors to measure market performance.
The details
Investors are incorporating these factors by using custom sustainable investment indices in passive allocations, a practice that has risen to 35% usage. However, 33% of asset owners report that the current quality of corporate reporting remains a leading barrier to implementation. Beyond climate, 32% of respondents now prioritize governance, tax, and shareholder rights, while 25% are focusing on health and healthcare risks.
Timeline
2025: Comparison data for investment priorities and barriers.
- 2026-09-22
Release of current survey findings.
Money Landscape
This shift marks a departure from earlier investment models that treated sustainability as a secondary concern. The data updates the 2025 sustainable investment reporting benchmarks by showing a broader integration of physical risk into core portfolio management.
If you hold ESG-themed funds or passive indices, these shifting priorities may lead to changes in the underlying companies included in your investments. Consider reviewing your fund's latest prospectuses to understand how managers are now weighing physical climate risks in their selection process.
The takeaway
Institutional investors are increasingly viewing physical climate threats as a material financial risk rather than just a social concern. As these standards evolve, review your own investment statements periodically to see if your funds have updated their sustainability and reporting disclosures.
Further reading
Learn more about the latest trends in Investing for your portfolio.
Live Poll
Do you believe investors should prioritize climate risks when making long-term investment decisions?
