The financial world is increasingly recognizing the undeniable impact that extreme weather events have on asset valuations and long-term investment returns. As climate change intensifies, factors like floods, storms, heatwaves, and wildfires are beginning to play a central role in reshaping the investment landscape. Apollo Global Management, a leading private equity and credit investment firm, is spearheading a shift in how risk is evaluated by introducing granular, asset-level climate assessments. This evolution of their investment process is a direct response to the growing realization that climate-driven disruptions can severely affect operating costs, supply chains, and insurance markets, all of which ultimately impact the financial bottom line.
Since 2023, Apollo has conducted top-down climate risk assessments, evaluating the broader impact of extreme weather events on portfolios. However, the firm is now going beyond this macro-level analysis to implement a more comprehensive, asset-specific review process before finalizing deals. The goal is clear: to factor climate risks into financial decision-making and valuation models at the most detailed level, ensuring that potential investments are well-positioned for the realities of an increasingly volatile climate.
The integration of climate risks into investment strategies is not a new concept, but Apollo’s updated approach is particularly notable in its depth and sophistication. Climate risks, once considered long-term uncertainties, are now seen as immediate financial factors that must be evaluated alongside traditional financial metrics. With the rapid rise of climate-driven disasters, such as wildfires and flooding, there is a growing consensus that these events need to be addressed proactively by investors to protect capital and ensure long-term stability.
Extreme Weather Is Reshaping Asset Valuations
The move reflects a growing recognition across private markets that extreme weather can rapidly erode asset values, sometimes overnight. When wildfires, floods, or severe storms hit, properties, infrastructure, and industrial assets can lose value abruptly while operating and insurance costs surge.
According to estimates from Swiss Re, natural catastrophes in 2025 resulted in $107 billion in global insured losses, with total economic losses reaching $220 billion.
“Elevated natural catastrophe losses are no longer outliers but the new baseline,” said Monica Ningen, Swiss Re’s chief executive of US Property and Casualty.
For asset managers like Apollo, these realities are forcing a rethink of how risk is modeled, priced, and disclosed to investors.
From Top-Down Models to Asset-Level Reviews
Pribulsky said Apollo’s updated framework now evaluates acute and chronic climate hazards at a much more detailed level. That includes:
- Loan-level mapping in mortgage portfolios
- Exposure to drought, flood, heat, and wildfire risk
- Analysis of how climate hazards affect collateral values
- Assessment of long-term cash-flow durability
These reviews are now embedded across every deal and asset class, rather than treated as a standalone sustainability exercise.
Advances in climate data, satellite imagery, and modeling technology are making it possible to quantify physical and transition risks with greater precision, allowing Apollo to integrate climate considerations into core financial analysis.
Infrastructure, AI, and Data Centers Under the Microscope
The expanded risk framework is especially relevant for large infrastructure investments, including data centers that support artificial intelligence workloads. Apollo has been active in this space, including an agreement to acquire a majority stake in Stream Data Centers.
“When looking at data centers, power is a key focus area given that it is one of the largest operating expenses,” Pribulsky said.
Apollo assesses:
- Energy efficiency and power sourcing
- Water use, recycling, and availability
- Exposure to heat stress and water scarcity
- Regulatory and resilience risks
Design choices, she noted, can materially influence costs, compliance exposure, and long-term operational stability.
Private Markets Follow Suit
Apollo’s approach reflects a broader shift across private capital. KKR said in July that it introduced a new credit climate risk model providing analysts with physical risk inputs for evaluating issuers and credit valuations.
Earlier, KKR warned that changes in climate conditions, and the response or failure to respond to them, could strain infrastructure, increase insurance costs, and weaken resilience across portfolios.
These developments highlight how climate risk is moving from a long-term scenario into a present-day financial variable.
Banks and Investors Reprice Climate Risk
Major Wall Street institutions are also pressing investors to treat extreme weather risk like other core financial metrics. Sarah Kapnick, global head of climate advisory at JPMorgan Chase & Co., said climate risk must be assessed alongside inflation, leverage, and political risk.
She noted that climate impacts can directly affect cash flows, costs, and profitability, but may also create opportunities for investors who understand how these dynamics evolve.
For private market investors, the issue is especially acute because assets are often held for many years, increasing exposure to long-term climate shifts.
Evidence Climate Risk Is Already Here
A recent report by MSCI found that physical climate risk is already affecting portfolios today. In an analysis of $2 trillion in listed equities, MSCI found that 55% of companies already face severe physical hazards.
Sectors most immediately impacted include real estate, insurance, and utilities. Analysts at Jefferies warned that higher insurance premiums, declining asset values, and reduced access to coverage are becoming common, while supply chains can be severely disrupted during major disasters.
Climate Risk Becomes a Core Valuation Input
Instead of treating physical climate risk as a distant concern, investors are increasingly seeing it priced into markets today. Apollo’s move to expand asset-level climate reviews reflects a broader transformation in private markets, where extreme weather is no longer an abstract sustainability issue but a fundamental driver of valuation, risk, and return.
As climate volatility intensifies, firms that integrate these risks into underwriting, credit analysis, and deal structuring may gain a critical advantage in protecting capital and identifying resilient investment opportunities.
| Company type | Public |
|---|---|
| Traded as | NYSE: APOS&P 500 component |
| ISIN | US0376123065 US03768E1055 |
| Industry | Asset management |
| Founded | 1990; 36 years ago |
| Founders | Leon BlackJosh HarrisMarc RowanTony Ressler |
| Headquarters | Solow Building, New York, New York, U.S. |
| Key people | Marc Rowan (Chairman and CEO) Jim Zelter (President) Scott Kleinman (Co-President) John Zito (Co-President) |
| Products | Private equity funds, credit funds, real estate funds, alternative investment, leveraged buyouts, growth capital, venture capital |
| Revenue |  US$26.11 billion (2024) |
| Operating income |  US$7.435 billion (2024) |
| Net income | US$6.373 billion (2024) |
| AUM | US$840 billion (2025) |
| Total assets | US$377.9 billion (2024) |
| Total equity | US$30.96 billion (2024) |
| Number of employees | 5,108 (2024) |
| Website | apollo.com |
| Footnotes / references [1] | |
