Investors Leave Climate Week Zurich Ready to Act

Climate Week Zurich drew together investors, insurers, corporations and policymakers to examine what it will take to move from climate commitments to action at scale. MSCI hosted three sessions, including a joint event with WWF on nature-related financial risk, and participated in broader conference programming on the energy transition and physical and geospatial risk. One theme ran through most of it: The debate about whether climate and nature risks can be measured has largely been settled. The question now is what financial institutions are changing about how they operate as a result.

The energy transition is reshaping valuations right now

Our energy-transition session examined how the shift to clean energy is already influencing company earnings and portfolio positioning, not just long-run alignment scores. Battery storage has reached cost parity. Carbon markets are maturing as a financing channel for clean technology. Yet many institutional investors still manage transition exposure primarily as downside risk, potentially underweighting a return opportunity already visible in technology signals.

Three points from the session are worth carrying forward:

• Assessing company readiness means examining both the external market and policy pressures a company faces and the genuine capacity of management to respond. Carbon-alignment scores alone do not answer that question.
• Policy pressure and technology readiness for the transition vary considerably by country, and a framework applied uniformly across a global portfolio may not reflect where exposure is actually concentrated.
• Carbon markets are becoming relevant to transition strategies beyond offset programs. Investor-grade carbon-credit intelligence is increasingly part of how institutional investors are thinking about financing the transition.

Physical risk is location-specific and indirect exposures dwarf direct ones

Most portfolio analysis stops at sector and country. It does not go to where exposure actually lives: the asset location. For example, Novartis AG is headquartered in Switzerland, but the vast majority of its output is produced elsewhere, spread across dozens of countries.¹ A company's registered address may therefore tell you almost nothing about where its physical risk is concentrated. Our recent study, Hidden in Plain Sight: Physical Risk in Asset Owners' Portfolios, conducted with 18 global asset owners, found that modeled business-interruption losses across their portfolios reach USD 1.07 trillion over the next year, against USD 76 billion in direct asset damage — a ratio of 14 to 1.

In the MSCI Switzerland Index, one in three companies faces severe physical risk exposure today, with 26% of index weight in that group, against 20% globally. Physical risk is also not arriving in isolation. Geopolitical instability and the AI infrastructure buildout are placing new demands on the same regions where climate hazards are highest. A data center in a water-scarce zone, a logistics hub on a coastal flood plain — these risks converge at the same location. Knowing you are exposed is not the same as being prepared.

Steve Bullock, Head of Geospatial Intelligence and Transition Products, MSCI, delivers his opening remarks.

The numbers for nature-related risk are in and regulation is catching up

Our joint session with WWF was built around a simple proposition that nature risk is already showing up on balance sheets. Across the MSCI ACWI Investable Market Index (IMI), USD 32 trillion in revenue is highly exposed to pollution risk and USD 7.3 trillion to water-availability risk. We also showed that country-level average risk scores underestimate water-risk exposure for 40% of total portfolio market value compared to using geospatial intelligence. This is because most of the exposure happens offshore and that within a given country the risk variability can be very high. 

What makes this actionable is the direct connection to revenue. For example, a flood at a key aluminium supplier in Switzerland forced Porsche AG to revise revenues down by EUR 2 billion, roughly 27% of prior year profits — one physical asset, one nature hazard, a material impact on a company far down in the supply chain.² That is the transmission mechanism we can now map at scale across millions of asset locations. Regulation is moving in the same direction: FINMA Circular 2026/1 requires Swiss banks and insurers to integrate nature-related risk into governance and risk management.³ Data availability is no longer an excuse for inaction.

Left to right, from our joint session with WWF: Lisa Eichler, Head of Physical Risk and Nature Products, MSCI (moderator); Veronica Baker, Senior Project Manager, Lead Impact Investing and Nature, SSF; Amandine Favier, Head of Sustainable Finance, WWF; Thierry Corti, Head of Nature & Biodiversity Models, MSCI; Agnes Neher, Chief Sustainability Officer, Helvetia Baloise Insurance Group; Sasha Cisar, Specialist in Sustainable Investments, NEST.

If it is not insurable, it may not be investable

A session hosted by UBS Group AG and Building Bridges brought together senior figures from Zurich Insurance Group AG and Swiss Re Ltd. With global insured losses at USD 107 billion in 2025, the message was clear from participants that insurance should be the last line of defense, not the first, and that the priority should be upfront resilience. For lenders, that means bringing insurance to the table when financing projects. An asset that cannot be insured should raise questions about whether it can be financed.

Adaptation investment remains heavily underfunded relative to mitigation, despite growing evidence that the financial returns to resilience investment can be calculated at the asset level with reasonable precision. Speakers argued that the cost-benefit case for proactive adaptation is no harder to make than for most capital-investment decisions. What has been missing are the governance frameworks that treat it as a mainstream investment consideration.

What comes next?

This year's Climate Week Zurich reflected a shift in where investors are stuck. The data exists. The frameworks are in place. What lags is the institutional-investor response in creating governance structures that treat this information as material, capital-allocation processes that reflect location-specific exposure and a willingness to act on analysis that has been available for some time.

It quickly became clear that investors who embed climate and nature intelligence into portfolio screening, stewardship and risk management now will be better positioned as regulation tightens and markets begin to price these risks. The opportunity to move from awareness to application is here. The time to take it is now.