Key Takeaways from Forecast 2026

In NYC last week, First Street – a climate finance analytics provider – convened global asset managers, pension funds and insurers at Forecast 2026 to address how physical climate risks are reshaping capital pricing, deployment and protection. The discussion focused on how the largest asset managers in the world are using climate data to inform underwriting assumptions, insurance constraints and capital allocation and empowering deal team decision-making.

The event reinforced that the gap between investors who have integrated climate risk into investment practices and those who have not is widening, and that gap is already affecting investment returns.

Here are our key takeaways from the conference:

1. Embed Climate Risk into Financial Models

Investment professionals managing hundreds of billions in assets are embedding forward-looking climate hazard data directly into due diligence, portfolio monitoring, risk-adjusted valuation and board oversight. No longer a matter of risk identification, asset managers are evaluating material risk exposure compared to hold periods and integrating mitigation costs into projected returns.

For example, some now use climate modelling to inform financial analysis, treating forward-looking hazard data as a standard input alongside interest rates, market volatility and credit risk. Both Apollo Global Management and KKR described walking away from transactions where physical risk emerged as a top concern, facilities showed elevated exposure to damages and asset hardening requirements affected cashflows.

2. Use Climate Data to Inform Decisions

Climate data only creates and protects value when it informs capital allocation decisions, operational planning and governance. To do so, the data needs to be understood and trusted. This reinforces the importance of data interpretation, in particular, understanding scenario assumptions, confidence ranges, time horizon alignment and interactions between multiple hazards.

While climate analytics are sharper and more granular than ever, some uncertainty still exists. Professor Robert Kopp from Rutgers University stressed that while the models are always improving, the outcomes are directionally consistent to start integrating climate risk into decision-making frameworks immediately.

3. Integrate Insurance Constraints into Resilience and Valuation Planning

For years, organizations assumed insurers would price climate risk in and provide clear signals about future risk exposure. That assumption is increasingly fragile given annual pricing cycles with limited forward visibility, shifting deductibles and exclusions, and tightening coverage in higher-risk geographies. Put simply, when insurance coverage renews annually, there is no pricing visibility beyond the term, which limits the ability to quantify the insurance benefit of resilience investments over time. In response, some are seeking to proactively understand if, how and what kind of asset hardening can lower premiums.

While insurance is critical, it can impact financial returns, tenant affordability, financing conditions and geographic concentration risk. Leading asset managers are stress-testing insurance coverage in case of premium increases, sublimit reductions, coverage exclusions and complete market withdrawal.

4. Factor in Business Interruption Risk

The largest financial impacts of climate disasters are not necessarily directly on the asset, but typically on its operations and returns. For example, an event might leave a facility intact but inaccessible to the workforce due to road closures, or with extended downtime from utility outages or critical infrastructure failures. Research shows business interruption accounts for 60-70% of total economic losses from climate events, yet only 30% are insured. Supply chain dependencies, single-point-of-failure operations and geographic concentration amplify this vulnerability.

Leading organizations are expanding climate risk assessment to examine infrastructure dependencies, workforce accessibility, revenue sensitivity to downtime and continuity plans for critical operations. Kelly Weisner from Ventas and Ben Myers from BXP described how evaluating a property for climate risks means looking beyond building envelopes to the reliability of the grid, stormwater infrastructure, transportation redundancy, water supply resilience and revenue implications if any of those fail.

In one case, an asset manager hardened a medical facility in a tornado-prone region after a prior event caused six months of downtime. When a later storm struck, the building sustained damage but operators restored functionality within six weeks. The hardening investment did not prevent all losses, but it accelerated recovery and preserved revenue.

5. Embed Climate Risk into Operations and Governance

The question is no longer whether climate risks should be considered; it is how effectively we are managing what we already know. While climate risk awareness is high, the prevailing gap is execution.

CPP, Amundi, Blue Owl Capital and KKR described embedding climate considerations into capital allocation frameworks, investment committee memos, enterprise risk governance and board oversight. Other tangible actions include conducting physical climate risk due diligence on acquisitions, incorporating projected losses into underwriting models, embedding adaptation costs into capital expenditure plans and requiring third-party engineering assessments when elevated risks are identified.

Ready to Bolster Resilience and Protect Value?

The question isn’t whether climate risk affects value — it’s whether you’re planning for it.

If you are ready to move from awareness to action, get in touch to define a roadmap for embedding climate risk into underwriting, capital planning, and governance that strengthens resilience and protects value.