What does climate change mean for investors today?

Climate risk is no longer a peripheral issue for investors or energy system planners; it is a direct driver of value, resilience and long-term performance.

We recently discussed this on an episode of Beyond Curious with LCP, where one of the central ideas was the value of treating climate change the way an investor treats a company balance sheet.

What sits on the asset side of the climate ledger – resilience, innovation, adaptation, new technologies – and what sits on the liability side – physical risk, supply-chain fragility, policy volatility, and carbon-intensive legacy assets? This framing helps investors see climate risk not as an ideology but as a structure of value shifting around them.

This blog brings together our perspectives from the investment and energy transition sectors, highlighting where risk is rising, where value is emerging and what organisations need to understand to stay ahead.

Climate-related investment opportunities in a warming economy

Looking at climate change through an investment lens highlights several areas where value is growing.
Infrastructure resilience is becoming critical. Much of today’s infrastructure was not built for higher temperatures or more volatile weather. Assets such as the Thames Barrier already operate far more often than expected. Providers of resilient infrastructure, adaptation solutions and protective engineering sit in a stronger long-term position.

There is also rising demand for solutions that limit further warming. Clean energy remains central, but value is also shifting towards low-carbon building materials, innovative food systems and regenerative agriculture. Fertiliser use continues to be a significant contributor to emissions; alternatives that improve efficiency and reduce dependency offer both climate and financial upside.

Materials used in transition technologies are another pressure point. Minerals required for electrification and renewables are becoming strategic assets in their own right. Access, extraction methods and operational efficiency all influence long-term value.

Emerging climate risks for investors and businesses

On the risk side, the picture is more intricate. Many of the most serious exposures sit deep within supply chains. Companies with global, multi-layered supplier networks face rising vulnerabilities to heat, flooding and water scarcity. Market-level data often masks where these risks truly sit.

Policy uncertainty is another driver. Shifts in US climate policy over recent years show how quickly regulatory direction can pivot. A single change can alter valuations, cost assumptions and investment appetite almost overnight.

Stranded asset risk continues to sit in the background. Fossil-related infrastructure is particularly exposed to abrupt policy changes or rapid technology substitution. Even without sudden shocks, a slower transition can still erode asset value by pushing up the cost of carbon-intensive activities.

How investors can manage climate uncertainty

The main challenge for both investors and corporates is pricing risk when historical performance tells you little about future conditions. Scenario analysis remains one of the most useful tools, not because it predicts the future, but because it stress-tests assumptions.

Effective climate scenario analysis examines the interaction between policy response, market behaviour and technology progress. It avoids false precision and encourages decision-makers to test strategies against multiple credible pathways.

Cross-sector alignment also adds value. Comparing energy-system scenarios with investment-led climate scenarios highlights blind spots and assumptions each discipline tends to overlook.

Improving climate data: physical risks, alignment metrics and supply-chain exposure

Climate analytics are evolving quickly. Carbon intensity still has value, but it is not enough for meaningful risk management. Alignment metrics, such as consistency with emissions pathways or temperature outcomes, offer deeper insight.

The next frontier is physical-risk data at supply-chain level. Such data will be critical to pricing climate risks more accurately. Investors are recognising that they need to move beyond just the locations of a company’s assets to assessing climate exposure across complex global networks. Data quality varies and there is a lot of work still to do, but progress is accelerating.  

This shift changes how we judge what is “green”. Some emissions-intensive sectors are essential for the transition. Mining is a clear example: operations generate emissions, but the minerals produced are critical for electrification. The priority is identifying which operators manage climate risks effectively and operate to higher standards, rather than excluding the sector outright.

Climate policy signals that matter for long-term investment planning

High-profile moments such as COP can still shape long-term investment conditions. The Paris Agreement illustrates how slow-burn commitments can drive systemic market change over several years. Future commitments from major emitters, particularly China, could have similar effects.

Nature and biodiversity are also gaining prominence. Their economic relevance is likely to increase substantially over the next decade, with implications for capital allocation, risk assessment and regulatory frameworks.

Innovation and long-term resilience in the energy transition

Despite uncertainties, the outlook is not wholly negative. Effective climate strategy doesn’t come from assuming we already know the answers. It comes from asking sharper questions, testing assumptions, and recognising where the data is solid – and where it is still catching up.  

Costs for clean technologies have fallen faster than expected. Innovation tends to emerge earlier and scale more rapidly than predicted. The UK’s research and industrial base puts it in a strong position to play a leading role in next-generation transition technologies, but it’s a work in progress.

These innovations create real economic opportunities and strengthen long-term system resilience. Organisations that engage with climate risk honestly and with an analytical, inquiring mindset, using robust data and cross-disciplinary insight, will be better placed to plan for long-term value in an uncertain transition.