The New Value Driver: Climate Risk Quantification & Transfer as a Catalyst for Successful Transactions

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Climate Risk Quantification & Transfer for Successful Deals

Climate Risk Quantification & Transfer for Successful Deals

In today’s private equity environment, climate risk is no longer a niche ESG topic or a concern limited to insurance buyers.

In today’s private equity environment, climate risk is no longer a niche ESG topic or a concern limited to insurance buyers. With natural disasters driving 260 billion dollars in global economic losses in 2025 and more than half of those losses remaining uninsured, physical climate risk is now a direct, material driver of EBITDA, leverage capacity, and exit valuations.

Aon’s climate risk advisory capabilities help sponsors treat climate as a core transaction and portfolio risk, not a background disclosure item. By combining analytics driven screening, asset level modelling and forward looking climate scenarios, deal teams can quantify climate exposure in financial terms, compare targets on a like for like basis, and embed climate resilience into valuation, capital planning and exit strategy.

Key insights

  1. Physical climate risk is now a material financial consideration in M&A, with rising disaster losses and a persistent protection gap exposing investors to uninsured volatility.
  2. Traditional red, amber, green ratings and backward looking loss histories are no longer sufficient; deal teams need quantified views of expected loss, operating and capital expenditure impacts, and implications for leverage and cost of capital.
  3. Robust climate analysis should combine natural catastrophe models with forward looking climate scenarios and extend beyond a target’s own sites to critical supply chain nodes and surrounding infrastructure.
  4. Insights must translate into clear actions, including where to invest in physical resilience, how to transfer risk through insurance, and when to reconsider or reprice a transaction.
  5. Climate and environmental due diligence has become a leading focus area for dealmakers, and demonstrable climate resilience is emerging as a premium at exit, supporting stronger valuations and smoother sale processes.
Climate Risk Quantification & Transfer as a Catalyst for Successful Transactions Report

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