Bloomberg: Companies with emissions targets are 3.5 times more profitable
Companies with higher exposure to climate risk are seeing their cost of capital increase by as much as 22 basis points, according to Bloomberg research.
The analysis found profitable firms are 3.5 times more like to have set emissions targets, suggesting climate commitments are now a signal of financial health.
“Target-setting appears correlated with financial capacity rather than ideology – companies with more available capital may simply have more room to make long-term commitments,” the sustainable team commented.
This comes at a time when climate-related disasters have driven $18.5trn in global spending since 2000, more than the combined costs of the global financial crisis, and the inflation-adjusted cost of the Great Depression.
In the Bloomberg research, drawing on its sustainable finance datasets and Bloomberg Intelligence analysis, the sustainable team analysed thousands of issuers to find that companies with a 10-percentage-point increase in modelled physical asset-damage risk face, on average, a 22-basis-point increase in their weighted average cost of capital, even when controlling for sector, size and geography.
“Lenders and investors appear to be treating severe-weather exposure similarly to other operational risks that influence long-term cashflow reliability,” the research explained.
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It also reported firms with higher ESG scores showed better total and risk-adjusted performance, and the results were not explained by traditional factor exposures.
“The underlying data suggests the scoring framework may be capturing operational discipline, governance quality, or other financially relevant attributes,” it said.
In other insights, Bloomberg found carbon capture technology was gaining traction as an investable category indicated by the Bloomberg CCUS Aggregate Equal Weight Total Return index (BCCAET) surging 37.6% in 2025, outpacing the Bloomberg World Industrials index (WLSTI) by 10.9 percentage points.
“These insights suggest financial markets are responding to measurable risk and performance indicators related to sustainability factors,” the report said.