Summary
New research finds climate action is accelerating, but not fast enough to meet the Paris Agreement’s temperature goals.
LSEG has published the sixth edition of its Net Zero Atlas, examining how the global energy transition, physical climate risks and adaptation efforts are reshaping economies and investment risk.
A decade after the Paris Agreement, accelerating climate action, stronger policy commitments and the rapid deployment of clean technologies have made the most extreme warming scenarios increasingly unlikely. Wind and solar’s share of G20 electricity generation has risen from around 5% in 2015 to almost 20% in 2025. However, current commitments remain insufficient, with the global economy increasingly anchored to a well-above-2°C trajectory.
LSEG analysis shows that meeting countries’ current 2035 climate commitments and maintaining emissions at those levels would imply approximately 2.35°C of warming by 2100. Continued reductions beyond 2035 could lower this to around 2.16°C, while faster progress towards net-zero commitments could reduce warming further to 2.08°C.
The findings show that chronic hazards such as heat and drought account for around 73% of the direct physical impact on global economic growth. Physical climate shocks can also spread through supply chains, trade and demand.
Companies in sectors such as energy, basic materials, real estate and utilities could face modelled physical risk impacts around 2.3 times the FTSE All-World average, though exposure varies widely.
The report also finds growing focus on climate adaptation among both companies and policymakers. The share of FTSE All-World companies referencing adaptation measures in their corporate disclosures rose from 39% in FY2023 to 61% in FY2025, while national adaptation planning is becoming more sophisticated. However, significant gaps remain in assessing future climate risks and mobilising the investment needed to strengthen resilience.
A decade after Paris, the energy transition has materially changed the outlook for global warming. Hot House scenarios, where warming exceeds 3°C or even 4°C, are looking increasingly unlikely, but the global economy appears increasingly anchored to a ‘well-above’ 2°C trajectory. For investors, this means navigating an accelerating energy transition alongside mounting physical risks, as both reshape economies. Adapting to new climate conditions and building resilience will increasingly require substantial resources from governments and businesses – while also creating new investment opportunities.
Jaakko Kooroshy
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