Two years running, the global climate record has been rewritten.
2024: The First Year Above 1.5°C
2024 was confirmed as the warmest year on record, with a global average temperature of 15.10°C, 1.6°C above pre-industrial levels, making it the first calendar year to exceed the 1.5°C threshold set out in the Paris Agreement.
2025: Not a Cooling, a Confirmation
2025 did not reverse the trend. It finished as the third-warmest year on record, only 0.01°C behind 2023 and 0.13°C behind 2024. Put differently: the past 11 years are now the 11 warmest years on record. And for the first time in the instrumental record, the three-year average from 2023 to 2025 exceeded 1.5°C above pre-industrial levels, a milestone the Paris Agreement’s long-term goal was designed to avoid.
Why Two Years of Data Matter More Than One
A single record year can be dismissed as an anomaly, an El Niño year or a statistical outlier. Two consecutive years in the top three, following a decade of the warmest years ever measured, is a trend line, not a spike. For anyone assessing long-lived assets against forward-looking climate scenarios, this is exactly the kind of signal that should be feeding into scenario selection, not just headlines.
Consequences for Real Estate
The implications haven’t changed, they’ve compounded:
- Increased exposure to climate risks: properties in flood, heat and wildfire-prone areas face growing vulnerability to physical damage, reduced value and, increasingly, uninsurability.
- Higher operational costs: rising temperatures are driving up cooling demand and accelerating wear on infrastructure not designed for current conditions.
- Shifting location demand: climate-resilient locations are gaining a market premium as buyers and renters price in exposure.
- Tightening regulation: frameworks like the EU Taxonomy and CSRD continue to require adaptation and resilience disclosures, even as their reporting scope narrows (see our updates on the EU Taxonomy after Omnibus and what the EU Omnibus actually changed).
What This Means for Asset Owner
- Assess climate risk using current scenarios, not ones built on last decade’s baseline.
- Prioritize resilient design and retrofit for assets in high-exposure locations.
- Re-underwrite investment strategy against where climate resilience is becoming a genuine driver of value, not just a compliance checkbox.
Whether 2026 breaks another record or not, the underlying trend is now well-established across three consecutive years of data. For real estate and infrastructure portfolios, the real question is no longer whether physical climate risk needs to be assessed, but whether the assessment is using current data.
How exposed are your assets to today’s climate reality? Visit our website or connect with us on LinkedIn to learn more about our resilience solutions.