The World Meteorological Organization’s new State of the Global Climate 2025 report reiterates climate risk as a core feature of today’s operating environment for companies, investors and investment analysts.
The WMO confirms that 2015-2025 is the hottest 11‑year period on record, with 2025 likely the second or third warmest year at around 1.43°C above the 1850-1900 average. Earth’s energy imbalance; the difference between incoming solar energy and outgoing heat, is now the highest in the 65‑year instrumental record, meaning more heat is being trapped in the climate system than ever before. The report highlights that extreme weather in 2025, from intense heatwaves to heavy rainfall and tropical cyclones, impacted millions of people and caused economic losses measured in the billions.
For the first time, the State of the Global Climate includes Earth’s energy imbalance as a key climate indicator, underlining that this is not simply about warmer days but about a deeply altered physical baseline for the global economy. The ocean is central to that story: it continues to warm and absorb carbon dioxide, acting as a buffer that is simultaneously masking and amplifying risks across food systems, infrastructure and financial assets.
According to WMO, the ocean has been absorbing the equivalent of around eighteen times annual human energy use every year for the past two decades, driving record ocean heat content and contributing to sea‑level rise. Annual sea‑ice extent in the Arctic was at or near record lows in 2025, Antarctic sea‑ice was the third lowest on record, and glacier melt continued unabated, locking in higher seas and more volatile hydrological patterns for centuries.
These dynamics translate directly into location‑specific physical risks that matter for valuations, credit analysis and fundamental research. Coastal and riverine flood risk, water stress, heat stress for labour and assets, and disruption to supply chains are no longer tail events confined to distant horizons; they are now recurring features of normal business years in many regions. For portfolio managers and investment analysts, that means conventional assumptions about asset lives, insurance availability and resilience need to be revisited and evidenced in models, scenarios and security‑level notes.
For SI Engage’s audience of investors, risk teams, investment analysts and stewards, the State of the Global Climate provides decision‑useful data that should shape how climate is integrated into research, engagement and oversight. The confirmation that the last 11 years are the hottest on record, alongside record ocean heat and accelerating ice loss, reinforces that climate risk is already embedded in macro conditions, sector dynamics and issuer fundamentals. Rising disaster losses, more frequent business interruption and shifting policy responses are now live inputs into earnings quality, cost of capital and long‑term value creation.
At the same time, the report’s focus on extreme weather, vulnerability and early‑warning systems underscores the social and governance dimensions of climate risk. Where and how companies build, insure, source and employ people increasingly reflects their exposure to climate‑related operational shocks and their capacity to manage them fairly and transparently. For active owners and analysts engaging with boards and executives, this is strengthening the case for joined‑up climate-ESG conversations that bridge physical risk, transition strategy and stakeholder outcomes.
The challenge, and indeed opportunity, is to connect these global climate signals with the existing investment processes at issuer, portfolio and strategy level. In practice, this often involves bringing sector‑ and region‑specific climate hazards into the same frame as cash‑flow assumptions, valuation work and position sizing, and ensuring that climate‑related engagement and stewardship activity can be traced over time. As climate impacts arrive earlier and more forcefully than many scenarios anticipated, investors and analysts are increasingly looking for ways to show how their understanding of the science is already embedded in day‑to‑day decisions, rather than treated as a separate overlay.
This is where SI Engage focuses: helping investment teams connect fragmented climate data, including benchmarks like the WMO State of the Global Climate, with internal research, risk and stewardship workflows so they can show their working, not just state their intent. With the 2025 report underscoring the scale and persistence of climate imbalance, the imperative is clear: climate is no longer an externality to be reported after the fact, but a core analytical lens for allocating capital, governing companies and engaging for resilient, long‑term value.
