Climate Risk: A System Out of Balance

Last month, we discussed heat stress and the unprecedented heatwave of May 2026, which claimed lives across Spain, England, and France. But was this simply an extreme weather event—or is it the new normal?

This month, we take a step back to explore the scientific foundations behind rising global temperatures and a step forward to examine the climate scenarios that may shape our future, in an effort to answer that question.

Our planet functions as a vast thermodynamic system. Every moment, it receives energy from the Sun while simultaneously radiating energy back into space. As long as these energy flows remain in balance, Earth's average temperature remains relatively stable.

Greenhouse gases play a crucial role in maintaining this balance. Acting as a natural insulating layer, they retain part of the Earth's outgoing heat within the atmosphere. Thanks to this natural greenhouse effect, the planet's average surface temperature is approximately +15°C, making life as we know it possible. Without it, Earth's average temperature would be around –18°C.

Η αύξηση των αερίων του θερμοκηπίου διαταράσσει την ενεργειακή ισορροπία του πλανήτη, οδηγώντας σε άνοδο της παγκόσμιας θερμοκρασίας και συχνότερα ακραία καιρικά φαινόμενα.

The challenge is that, over the past 250 years, one species living on this planet (guess who) has fundamentally altered the rules of the system.

Since the Industrial Revolution, human activities have dramatically increased atmospheric greenhouse gas concentrations. Carbon dioxide (CO₂), for example, has risen from approximately 280 ppm during the pre-industrial era (NOAA ice core records) to about 422 ppm today (Global Carbon Project, 2024).

In any thermodynamic system, a change in the energy balance inevitably leads to the establishment of a new equilibrium. For Earth, that new equilibrium can only occur at a higher temperature. Put simply: as greenhouse gas concentrations increase, so does the planet's temperature.

So... What Happens Next?

The year 2024 was the warmest ever recorded, reaching 1.55°C above pre-industrial levels (WMO, 2025), making it likely the first calendar year to exceed the 1.5°C threshold. The five-year running average has already reached 1.25°C (Climate Central, 2025), and at the current rate of warming, a sustained exceedance of the 1.5°C limit is expected around 2030 (Carbon Brief, 2025). Notably, the ten warmest years on record have all occurred within the last decade (NOAA, 2024).

Τα σενάρια του IPCC δείχνουν ότι, ανεξάρτητα από την πορεία που θα ακολουθηθεί, οι επιχειρήσεις θα αντιμετωπίσουν αυξανόμενους φυσικούς και μεταβατικούς κλιματικούς κινδύνους.

IPCC Climate Scenarios: Three Possible Futures so you know

The IPCC Sixth Assessment Report (AR6) defines five Shared Socioeconomic Pathways (SSPs). Three of them are particularly relevant for strategic planning:

SSP1 (~1.5°C by 2100)Achieves net-zero emissions by 2050 through a rapid transition to renewable energy. This is the only pathway aligned with the Paris Agreement. Even under this optimistic scenario, physical risks such as floods, droughts, and approximately 38 cm of sea-level rise remain unavoidable. At the same time, transition risks—including regulatory, technological, and market changes—remain significant due to the speed of decarbonization.

SSP2 (~2.7°C by 2100)Represents a continuation of current policies and broadly reflects today's global trajectory. It is associated with more severe droughts, floods, and heatwaves across the Mediterranean, around 56 cm of sea-level rise, and increasing pressure on supply chains, infrastructure, and urban resilience.

SSP5 (~4.4°C by 2100)The high-emissions, worst-case scenario. Greenhouse gas emissions continue to rise through 2050, resulting in approximately 77 cm of sea-level rise, dangerous levels of humid heat across large regions, widespread shifts in climate hazards, and increasing instability within the global financial system.

Whether Physical or Transition Risks—Climate Risk Is Unavoidable

Each climate scenario presents a different combination of physical risks—such as floods, heatwaves, and droughts—that affect assets, infrastructure, and business continuity, alongside transition risks, including regulatory changes, shifting market dynamics, and technological disruption that influence corporate strategy and business models.

The longer action is delayed, the greater the physical risks become.

The faster the transition, the greater the transition risks.

Effective climate risk management requires organizations to understand, assess, and prepare for both.

Climate risk is often described as the "elephant in the room." With RiskClima we bring that elephant into the open—measuring its scale, quantifying its impacts, and helping organizations adapt before today's risks become tomorrow's losses.

How E-ON Integration Helps

Through RiskClima, its Climate Risk intelligence platform, E-ON Integration provides modelling and quantitative assessment of both physical and transition climate risks at the asset level, across multiple climate scenarios and time horizons, using authoritative data from the IPCC AR6, Copernicus, NGFS, and other internationally recognized sources.

Climate risk is often described as the "elephant in the room." We bring that elephant into the open—measuring its scale, quantifying its impacts, and helping organizations adapt before today's risks become tomorrow's losses.

The need extends well beyond regulatory compliance with frameworks such as CSRD, the EU Taxonomy, or Basel IV. Even organizations with no reporting obligations face a fundamental strategic question:

Will their business model remain resilient in a world that is 2.7°C—or even 4.4°C—warmer than today?