The climate timeline is shifting. What the Copernicus 2025 report tells us.

What Copernicus observed in 2025

The report highlights a series of key findings that together point to continued and accelerating warming:

• 2025 was the third warmest year on record globally, continuing a persistent upward temperature trend.

• 91 percent of the planet experienced above-average temperatures, indicating that warming is widespread rather than regionally isolated.

• All regions show a clear long-term warming trend, with the most pronounced acceleration observed in the Arctic.

• Global sea ice extent reached its lowest level in February since satellite observations began.

• By the end of 2025, average global temperatures were approximately 1.4°C above pre-industrial levels.

• At the current rate of change, the 1.5°C threshold is likely to be reached by the end of this decade.

These findings matter not because they break individual records, but because they challenge several underlying assumptions used in climate risk planning, asset valuation, insurance coverage, and long-term investment strategies.

Why this matters now, not later

Many climate strategies across real estate, finance, and insurance have historically been built on the assumption that physical climate impacts would intensify gradually and could be addressed incrementally over time. This framing is well documented in earlier climate risk assessments and scenario-based analyses, including those published by the IPCC and later adopted in financial stress-testing frameworks such as the NGFS climate scenarios.

The Copernicus observations suggest that this gradual timeline may be less reliable as a sole planning assumption.

As warming progresses, physical climate risks are being observed earlier and across broader geographies than many organizations had previously anticipated. What was previously treated primarily as a future concern is increasingly becoming a present-day operational and financial consideration.

This matters in practice because many assets and portfolios are still primarily assessed using historical data and backward-looking risk models, supplemented to varying degrees by forward-looking analysis. As noted by regulators including the European Central Bank and the European Banking Authority, traditional risk models were not designed to capture rapidly changing physical risk patterns, particularly for hazards such as flooding, heat stress, and extreme weather disruption.

From climate targets to mispriced risk

The most important implication of the Copernicus findings is not about missing climate targets. It is about risk being assessed on assumptions that may no longer fully reflect physical conditions.

Buildings, infrastructure, loan portfolios, and insurance systems were largely designed and financed during a period of relative climate stability. As physical conditions evolve, the financial consequences become more visible.

This is reflected in trends such as higher insured losses, adjustments to deductibles and exclusions, and increased attention to insurability in certain regions. When insurance coverage becomes more limited or more expensive, the effects extend beyond insurers themselves, influencing property values, lending decisions, development plans, and municipal finances.

For banks and investors, this translates into questions around credit risk, asset value uncertainty, and portfolio exposure. For insurers, it raises considerations around long-term risk transfer and underwriting assumptions. For real estate owners, it affects operating costs, resilience planning, and long-term asset value.

This is how climate change moves from being primarily a sustainability topic to becoming a financial and strategic issue.

Adaptation as a practical delivery challenge

Nothing in the Copernicus report reduces the importance of mitigation. Emissions reductions remain essential to limiting long-term climate change. What the report does make clear, however, is that adaptation increasingly needs to be considered in parallel.

For many organisations, this means planning for 1.5°C and above as a baseline rather than as an edge case. It requires understanding physical climate risk at asset level, not only at portfolio level, and recognising how that risk affects operations, insurance, financing, and long-term value.

It also involves prioritising no-regret measures that strengthen resilience while delivering near-term benefits, and embedding physical risk considerations into everyday decision-making rather than treating them primarily as part of annual reporting cycles.

Mitigation and adaptation are therefore best understood as complementary efforts rather than sequential steps.

The question decision-makers must answer now

The Copernicus report does not call for dramatic shifts in ambition or tone. It raises a more practical question:

Are today’s investment, lending, and planning decisions based on observed physical conditions, or on assumptions that were formed under a different climate baseline?

The climate system is changing, and the pace of that change is becoming clearer. The remaining question is how quickly financial and real asset decision-making frameworks will adjust in response.

Sources and references

• Copernicus Climate Change Service (C3S): Global Climate Highlights 2025 — https://climate.copernicus.eu/global-climate-highlights-2025

• IPCC Sixth Assessment Report (AR6) overview — https://www.ipcc.ch/assessment-report/ar6/

• IPCC AR6 Synthesis Report: Summary for Policymakers — https://report.ipcc.ch/ar6syr/

• NGFS Climate Scenarios for central banks and supervisors — https://www.ngfs.net/en/publications-and-statistics/publications/ngfs-climate-scenarios-central-banks-and-supervisors

• NGFS Scenarios Portal (scenario data & resources) — https://www.ngfs.net/ngfs-scenarios-portal/

Observations on climate conditions are based on publicly available Copernicus datasets. References to financial and risk implications reflect guidance and analyses published by European supervisory and standard-setting bodies.