Buzz: Transfer to editor

Key points:

• The scope 1 to 3 emissions framework is essential for measurement, but says little about how businesses actually drive or reduce carbon emissions.
• Influential sectors with small footprints – such as exchanges, rating agencies, social media and audit – can enable huge amounts of high-carbon activity.
• Companies providing real solutions risk being misjudged if investors focus excessively on their scope 1 to 3 numbers.

Extreme weather events are reshaping the investment landscape. How can investors protect portfolios—and communities—from the rising physical risks of climate change?

Physical climate risk is no longer theoretical—it’s here. Floods, fires, and black-rain events are increasing in frequency and intensity, with real financial consequences. Simon Whistler outlines how investors are beginning to quantify and address these risks, yet highlights that fewer than one-third of PRI signatories currently report on physical climate risk metrics. Calvin Lee Kwan shares how Link Asset Management has moved from reactive recovery to proactive resilience—reducing insurance premiums by 11.7% and strengthening investor confidence in the process.

Key Insights

• Advances in research tools and techniques have greatly enhanced the ability to view how DNA, RNA, and proteins move and interact.
• This deeper understanding of human biology is enabling new classes of medicines that can create better outcomes for patients.
• These new therapies can block the activity of harmful proteins more effectively than existing treatments or increase the production of beneficial ones.
• The largely binary outcomes for biotech stocks requires a deep understanding of both the clinical and commercial prospects of a company’s drug pipeline.

Watch Bryan Carter, Head of Emerging Markets Fixed Income, and Yakhara Sembene, Senior Industry Specialist at the International Finance Corporation (IFC), discuss how emerging markets companies that are actively pursuing sustainable practices have created an asset class capable of delivering attractive and diversified returns.

Key takeaways

• Weather-related events are a major financial risk for countries and companies, but their materiality is not well understood across financial institutions.
• We have developed an in-house physical risk screening and scoring system to assess country-level exposure.
• Granularity by location is needed, as it remains a challenge in assessing corporate exposure.
• Although some industries – eg, insurance – are using adaptation measures, there is a need to improve data and invest in adaptation infrastructure.

Q3 2025 marked a record high for global shareholder activism, with 61 campaigns launched, defying the typical summer slowdown and setting the stage for an active Q4.

Our Investment Banking Global Shareholder Advisory team’s Q3 Review of Shareholder Activism also sees major activists increasingly launching campaigns year-round and a heightened focus on board change.

The Emerging Markets Debt credit team makes annual visits to India, allowing us to monitor the country’s rapid development—by being present on the ground, witnessing visible changes, and listening to the sentiment expressed by residents and companies.

During our most recent tour, we observed remarkable progress in the country’s efforts toward its goal of Swarnim Bharat (a term embodying India’s ambition to become a more prosperous, self-reliant and thriving nation).

Conversations with local industry leaders and policymakers underscored a unified drive to achieve ambitious renewable energy targets and reduce dependence on imported fuels. In our view, the scale and speed of infrastructure upgrades, digital transformation and green finance initiatives demonstrate India’s determination to integrate economic growth with sustainable development.

Effective measurement of progress toward net-zero alignment has never been more important to investors and companies that have adopted net-zero ambitions.

In line with the Paris Agreement on climate change, 2025 marks a key milestone in the pursuit of net zero, as many companies that have stated net-zero ambitions approach the first checkpoint for their emission reduction targets.

As additional data becomes available to capture the adoption of low-carbon technologies, investors that focus on this area have had to evolve their assessment methods. This evolution is necessary for them to better understand companies’ progress in aligning with a net-zero scenario. Despite these changes, one constant has remained: There is no singular data point that can capture the nuance of how companies across sectors are approaching their net-zero goals.

Justin Patrie, Head of Credit Commentary & Research, and Sarah Repucci, Senior Director, Credit Commentary & Research, discuss emerging challenges for the AI-fueled US data center boom, covering investment, rising costs, impact on utilities and more (includes discussion of energy/renewables)

The world's population is likely to continue growing for a few more years, but with only around two dozen countries driving that. The rest of the world is shrinking, including Europe and Germany in particular. One problem associated with population decline is the resulting strain on pension systems.

The birth rate is only one of several factors influencing the viability of pension systems. The pay-as-you-go system suffers from the fact that each contributor is having to support more and more pensioners. This could be relieved in various ways – other than by a rather unlikely turnaround in the birth rate. The rate of employment or the retirement age could be increased. Pensions could be reduced. Higher immigration could be permitted. Or economic productivity could be raised. It is likely that all four of these levers will have to be pulled. In addition, however, a pension system funded by investment savings is, in our view, urgently required.

Companies today face intensifying pressures—from surging electricity demand and water shortages, to shifting policies and regulations, to a rise in megamergers. How companies handle these pressures matters to their bottom lines—and to shareholder value. The challenge for investors is determining which businesses will adapt and thrive, and which will struggle. In our view, applying a stewardship lens can help.

That means assessing how companies manage the fundamentals that drive long-term value: resource use, supply chain practices and governance. We believe that companies that conserve water and energy, demonstrate sophistication around their supply chains and maintain corporate discipline are better positioned to protect margins and preserve capital. That discipline can translate, in our analysis, into more resilient earnings and stronger shareholder outcomes over time.

Bond issuance linked to environmental, social and governance (ESG) purposes dipped in the first half of 2025 following a strong second half in 2024. But we expect issuance of ESG-labeled bonds will pick up for several reasons.

Many debut issuers are still coming to the market (Display, left). Borrowers from Austria, Sweden and Spain have significantly increased their ESG-labeled bond issuance, providing over 5% of global total issuance year to date. Their contributions underscore the adaptability and resilience of the ESG-labeled bond market, as many issuers continue to prioritize responsible investing.

In terms of sectors, new ESG-labeled issuance by utilities comprises a substantial part of the market, averaging around 9% of annual issuance from 2018 through 2024. We expect that growing demand for energy from data centers (Display, right) will result in higher capex by utilities and a further increase in their ESG-labeled bond issuance. Why?

Companies are accelerating their adoption of artificial intelligence (AI) to boost productivity and rein in costs—an urgent priority in today’s environment of elevated inflation and sluggish growth. This speed makes it important for investors to pay close attention. In our view, the environmental and social implications of AI—energy intensity, workforce impact and data governance—are financially material to most companies around the world.

Indeed, artificial intelligence is the most consequential technological innovation since the internet, poised to permeate every industry and reshape economies and societies in the years ahead. Business adoption of AI has intensified since late 2022, when generative AI* tools like ChatGPT burst onto the scene. Functions such as IT, finance, and supply chain and manufacturing have been early leaders, while areas from marketing and sales to product development and human resources are poised for broad adoption in 2025 (Display).

In the world of investment, fashion might not be the first sector that comes to mind when thinking about systemic risk. But beneath the surface of seasonal trends and glossy campaigns lies a complex and increasingly volatile supply chain landscape, one that’s becoming a material concern for asset managers. 

RepRisk’s latest analysis of global supply chain risk reveals a sobering truth: reputational, regulatory, and operational risks are mounting, and they’re not confined to emerging markets or fringe players. They’re embedded in the operations of some of the world’s most prominent brands and they carry direct implications for financial institutions. 

New research from RepRisk reveals that the global share of companies linked to both greenwashing and biodiversity risks has doubled over the past five years – from 3% in 2021 to 6% in 2025.

• Biodiversity dominates the environmental risk landscape: 38% of all environmental risk incidents tracked by RepRisk in the past year involved biodiversity – followed by local pollution (33%) and waste (17%).
• Gatekeepers between capital and sustainability under scrutiny: 294 Banking and Financial Services firms were flagged for greenwashing risk in 2025 – a 19% rise from 248 the year before.
• Repeat behavior in some sectors: In aviation, seven in ten companies flagged for greenwashing in 2024 were flagged again in 2025.

Report and commentary here