Europe's Climate Resilience

By Julie Ansidei, BlackRock EMEA Government Affairs & Public Policy

Europe is warming faster than any other continent, and the economic costs are mounting. As EU policymakers prepare a new integrated climate resilience framework, the central challenge is becoming clearer: defining acceptable levels of risk, clarifying the roles of the public and private sectors, and mobilising investments at scale to improve preparedness. For policymakers, this is not solely a question of prevention and planning, but also of fiscal resilience and competitiveness. Done well, the initiative can help strengthen Europe’s broader resilience and security and create opportunities for European companies and investors.

Since the 1980s, temperatures across Europe have risen at roughly twice the global rate.¹ Factors including an aging population, urbanization and under-preparedness also increase vulnerability, while insurance protection varies significantly across countries and hazards. Recent unprecedented episodes of extreme heat affecting large parts of Europe have provided a stark illustration of these risks and challenges.

Against this backdrop, the European Commission has been working on a comprehensive approach to climate resilience and risk management, expected in late 2026.

Accelerating preparedness across the economy

Primarily aimed at countries and public institutions, the new framework will seek to strengthen the tools available, raise awareness across the private sector and improve risk monitoring and adaptation planning. It will bring several policy choices into focus: the levels of risk Europeans are willing to accept, how those risks should be shared across governments, insurers, companies, investors and households, and the right mix of requirements and incentives to support preparedness.

These questions point to a set of difficult trade-offs for policy makers and market participants alike. First, speed matters, as many resilience measures have long lead times. Second, they are often costly, at a time of growing fiscal pressure for governments and rising costs for businesses and households. Third, adaptation must be integrated with other European strategic priorities – climate and environmental goals, competitiveness, sovereignty - as well as wider security² considerations. Because energy infrastructure itself is vulnerable to climate risks and other threats, resilience considerations will be essential as Europe

seeks both to strengthen energy security and to accommodate rapidly growing energy demand from AI.

The forthcoming EU resilience framework offers an opportunity to help translate the impacts of warming in Europe, accelerate preparedness, stimulate innovation and strengthen public-private collaboration.

Assessing financial risks

While societal preparedness is still low, awareness in the private sector is increasing and we see increasing demand from clients for strategies that incorporate climate resilience considerations. For investors, including firms like BlackRock, new geospatial data and analytical tools allow more granular assessment of exposures, combining issuers’ geographic footprints with physical climate risk models and inputs from weather agencies. Investors can also look at how changing temperatures may affect energy demand for cooling and heating in specific geographies, or exposure to water stress.

However, many factors remain difficult to assess, such as specific asset type vulnerabilities, loss of earnings or adaptation measures in place. Second-order effects – such as insurance coverage, supply chain disruption and broader socio-economic impact in affected regions – are typically not captured, nor are alternative transmission channels, such as weaker spending or climate-driven inflation. Understanding the tools available to the private sector will be important in the dialogue with policymakers.

Climate resilience as an area for growth and innovation

As physical climate risks become more apparent, demand for climate resilience solutions is expected to grow³, with needs across hard infrastructure, products and services. Examples⁴ include insulation, flood protection, grid hardening, cooling solutions, water conservation, and drought-resistant crops. They also extend to forecasting and early-warning capabilities, as well as disaster management and recovery.

Other major economies severely impacted by climate change, including China, are moving to scale adaptation finance and back innovation. Europe has the potential to lead but needs deeper and more integrated capital markets to scale those opportunities, as discussed in our ViewPoint: A Roadmap to Growing European Capital Markets.

The role of the private sector

The business case for adaptation investment is becoming clearer, and we see that many companies are stepping up their efforts, partly to demonstrate preparedness to investors. Beyond physical damage to their facilities and insurability, companies are concerned about disruptions to their supply chains, their ability to serve customers, access to power or water, productivity losses, changing customer demand, and the protection of their workforce. Resilience will depend on individual efforts as well as the preparation of local communities, infrastructure and, in some cases, entire regions.

The work of the European Commission can support preparedness across the private sector, including investors, through improved physical climate data, better alignment of risk assessments, as well as a better understanding of the range of existing or emerging adaptation solutions and a clear vision of adaptation priorities across Europe.

Public and private efforts to support resilience in emerging markets and developing economies, although not covered by this specific initiative, will also be critical.

Ultimately, the success of the Commission’s climate resilience goals will be defined by how effectively public policy, risk management and the mobilisation of private capital come together at scale.

¹ Europe has experienced average annual temperature over the past five years of around 2.4˚C above pre-industrial levels. According to Copernicus, changing weather patterns, increasing solar radiation, reduced air pollution, decreasing snow cover and proximity to Arctic, the fastest-warming region on Earth, are all factors contributing to this trend. In 2024, the European Environmental Agency identified 36 climate risks with potentially direct impacts across critical sectors such as energy, food, health and infrastructure, and severe consequences across Europe.

² See here for Commissioner Hoekstra’s opening remarks at the High-Level Roundtable on Climate Resilience and Defense and Security on May 26, 2026.

³ See BlackRock Investment Institute, Climate Resilience as an Investment Theme, December 2023.

⁴ The European Commission identifies over 2,600 adaptation measures applicable to Europe.

Disclaimer

This content represents the regulatory and public policy views of BlackRock. The opinions expressed herein are as of Aug 2026 and are subject to change at any time due to changes in the market, the economic or regulatory environment or for other reasons. The information herein should not be construed as marketing material, research or relied upon in making investment decisions with respect to a specific company or security.