Climate-related physical risks are becoming a greater priority for global investors as sustainability considerations increasingly move into mainstream investment decisions, new research suggests.
A FTSE Russell survey of 402 asset owners across 24 countries found 26% now identify climate physical risk as a key sustainability priority, up from 19% in 2025. The shift comes as investors face growing evidence of the material impacts of climate change on assets and long-term returns.
Governance, tax and shareholder rights was the most commonly said to be a sustainability priority, identified by 32% of respondents compared with 18% last year.
Investors are also increasingly considering sustainability risks beyond traditional environmental, social and governance issues. Health and healthcare risks were highlighted by 25% of respondents, while 24% identified technology and artificial intelligence-related risks.
The research found there are changing attitudes towards sustainable investment. Concerns around greenwashing and the availability of environmental, social and governance data have fallen, with 22% and 25% respectively identifying them as barriers, down from 37% and 36% in 2025.
However, 33% of asset owners say the quality of corporate reporting is the leading barrier. The finding comes as sustainability reporting rates have levelled off and regulatory requirements change across Europe and North America.
Just over half of respondents now apply sustainability considerations to more than 50% of their assets, suggesting such factors are becoming increasingly integrated into portfolio management.
The use of custom sustainable investment indices in passive allocations has also increased, rising from 21% last year to 35% this year.
The findings point to a broader approach to sustainable investment, with physical climate impacts, data quality and emerging risks increasingly influencing how investors assess long-term portfolios.
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