Market Perspectives Webinar: Building Resilience in a Changing Climate

Physical climate risks are increasingly influencing the performance, operation and long-term value of real assets. For investors, understanding these risks, and how assets can adapt to them, is becoming an increasingly important part of building resilient portfolios.

In our latest Market Perspectives webinar, Building Resilience in a Changing Climate, we explored how a changing climate is affecting energy systems, infrastructure and natural capital, and what this means for long-term investors.

Here are five key themes from the discussion.

1. A more volatile energy system is reshaping the investment landscape

Changing weather patterns are influencing how energy is generated, distributed and valued. Record temperatures across parts of Europe have highlighted both the strengths and vulnerabilities of the energy system, contributing to greater volatility in electricity prices.

In the second quarter of 2026, Spain experienced nearly 600 hours of negative power prices¹. Yet, as solar generation declined later in the day, the opposite effect could be seen, with prices exceeding €1,000/MWh in Belgium during a 15-minute settlement period².

For investors, this volatility is changing the economics of generation and increasing the importance of understanding when and where power is needed, not simply how much can be produced.

2. Energy-system resilience extends beyond renewable generation

Renewable generation remains fundamental to the energy transition, but generation alone cannot create a resilient energy system.

Solar provided 25% of EU power in June for the first time ever³, helping to meet demand at a time when high temperatures were affecting conventional generation. However, the challenge is increasingly how to integrate this growing volume of renewable power effectively.

Grid infrastructure, interconnection and storage are therefore becoming increasingly important. Global grid investment was estimated to be 5% behind the level required in 2025, highlighting the scale of infrastructure still needed⁴.

The next phase of the transition will require greater focus on flexibility, ensuring electricity can be moved, stored and supplied in the right place at the right time.

3. Physical climate risk needs to be considered across portfolios

For real asset investors, physical climate risk extends beyond the immediate boundaries of an individual asset.

Extreme temperatures, flooding and wildfire may directly affect operations, but indirect risks can be equally important. Research discussed during the webinar examined 53 US assets affected by wildfire smoke and found an average of 8.3% reduction in solar PV electricity⁴, despite the impact arising from smoke rather than direct fire damage.

Supply chains create another layer of exposure, with climate-related disruption in one location potentially affecting assets elsewhere.

Understanding these dependencies at portfolio level can provide a more complete picture of physical climate exposure and help investors identify where vulnerabilities may emerge as conditions change.

4. Resilience is also an asset-management challenge

Identifying climate risk is only the starting point. The more important question is how that understanding informs decisions throughout an asset’s life.

Resilience can be considered from the design stage, with infrastructure and equipment selected and configured to reflect the physical conditions they may face. During operations, measures such as vegetation management, thermal inspections, monitoring and emergency planning can further strengthen preparedness.

This is why resilience should not be viewed solely as an investment-screening exercise. Active asset management can help turn an understanding of physical climate risk into practical action, supporting long-term performance and asset resilience.

5. Natural capital can form part of the resilience solution

Resilience is not limited to built infrastructure. Well-managed natural systems can help address challenges including flooding, drought and biodiversity loss while continuing to produce resources such as food and timber⁵.

Our Knock Fell site in Scotland illustrates this potential. More than 100 hectares of degrading peatland have been restored alongside the creation of a multi-purpose forest. The new woodland is expected to sequester an additional 24,000 tonnes of carbon over 100 years and deliver 11,000 tonnes of timber over 40 years, while peatland restoration is expected to prevent 23,000 tonnes of carbon emissions.

The principle extends beyond individual projects. Restored wetlands can retain water and help manage downstream flooding, while healthier soils can improve the ability of crops and trees to withstand drought.

Resilience as an investment opportunity

Across energy, infrastructure and natural capital, the direction is increasingly clear: resilience requires investment.

For long-term real asset investors, that means looking beyond climate risk purely as a downside consideration. The need to adapt energy systems, assets and landscapes is also creating areas of significant investment need.

As the climate evolves, successful long-term ownership will increasingly depend on identifying those needs early and actively managing assets to remain productive, adaptable and resilient.