02 September 2026
5 min
Regulation, market practice and changing investor priorities continue to shape the sustainability landscape. With this, expectations for asset owners, investment managers and companies are also changing. In our monthly sustainability blog, we focus on the developments we believe have the greatest relevance for investors.
Across Europe, more than 250,000 hectares of land have burned since the start of 2026, with wildfires forcing evacuations, damaging local economies and threatening lives. Japan experienced its longest recorded run of temperatures exceeding 40°C, while temperatures approached 50°C in North Africa.
Meanwhile, storms and unusual winter flooding caused widespread damage in Chile. These events illustrate the wide-ranging consequences of climate change, with extreme weather placing growing pressure on people, ecosystems, infrastructure and essential services.
Closer to home, the Environment Agency declared that more than half of England was in drought in July after the country received just 7% of its long-term average rainfall for the month. Reservoir storage fell, river flows declined and several water companies introduced temporary use bans. The effects extended well beyond household water supplies. Farmers reported reduced crop yields, greater fire risks during harvesting and concerns about livestock feed. Low river flows contributed to algal blooms, fish deaths and deteriorating water quality.
These events demonstrate how climate risks can spread across natural systems, supply chains and the wider economy. While reducing emissions remains essential, asset owners also need to consider how their portfolios can withstand the physical effects of climate change now and in the future.
Asset owners should ask their asset managers how they assess and mitigate physical climate and nature-related risks. This would include how extreme weather and pressure on natural resources could disrupt investee companies’ operations and supply chains.
Investors can encourage companies to develop credible adaptation plans and demonstrate how their business models will remain resilient as climate impacts become more severe and costly through effective stewardship and engagement programmes.
Investors should also consider opportunities to build portfolio resilience by investing in climate adaptation, resilient infrastructure, and natural capital solutions.
The European Commission has set out a package combining a new Electrification Action Plan with proposed reforms to the European Union Emissions Trading System (EU ETS). Together, the measures aim to accelerate industrial decarbonisation, reduce Europe’s reliance on imported fossil fuels and strengthen its competitiveness.
Electricity has remained at around 23% of final energy use for the past decade, despite roughly 70% of EU electricity now coming from domestic clean energy sources. The Commission will assess an indicative target to double this share to 46% by 2040.
The action plan seeks to make electricity more affordable and encourage its adoption across industry, transport and buildings. Proposed measures include:
The accompanying EU ETS proposals would update the carbon market for the period after 2030, with the Commission seeking to strengthen its role in supporting investment, innovation and industrial decarbonisation.
Asset owners should consider the investment opportunities that electrification could create across their portfolios and ask their asset managers how they identify the businesses, technologies and infrastructure positioned to benefit. Investors should also assess whether they remain exposed to assets or business models that could lose value as policy, technology and demand shift away from fossil fuels.
By considering both sides of this change, asset owners can seek to capture the opportunities created by electrification while managing the risk of being left behind as energy systems evolve.
If you’d like to discuss these developments or explore how we can support you, please get in touch.
This blog is based upon our understanding of events as at the date of publication. It is a general summary of topical matters and should not be regarded as financial advice. It should not be considered a substitute for professional advice on specific circumstances and objectives. Where this blog refers to legal matters please note that Hymans Robertson LLP is not qualified to provide legal opinion and therefore you may wish to obtain independent legal advice to consider any relevant law and/or regulation. Please read our Terms of Use - Hymans Robertson.
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