ESG: Overshooting 1.5°C. What now?

• Meta agrees landmark settlement over child social media addiction – the social media giant has agreed to pay up to $18bn and introduce stricter child safety measures on Facebook and Instagram, including usage limits and reduced notifications, to settle a landmark US lawsuit alleging its platforms contributed to mental health problems for teens.
  
  
• Green bond issuance reaches record high – a new report from bond ratings agency Moody’s shows global green bond issuance hit a record $193bn in Q2 2026, driven by strong European demand, highlighting continued investor appetite for sustainable finance despite weaker issuance in some other labelled bond segments.
  
  
• Political backlash against climate reporting intensifies – a coalition of 16 US state attorneys general has escalated their opposition to climate-related disclosures by targeting the Big Four accounting firms. The states have threatened legal and regulatory consequences if they continue to support frameworks such as TCFD, citing increased costs and perceived conflicts of interest. This latest challenge adds further uncertainty to the future of climate disclosure standards in the US and may complicate efforts to deliver globally consistent sustainability reporting.
  
  
• UK Commits £400m to Global Forest Protection Fund – the government has pledged a £400m loan to a Brazil-led tropical forest preservation fund, aiming to mobilise billions in long-term financing for rainforest protection and reflecting growing use of investment-based approaches to fund global climate and biodiversity initiatives.

Overshooting inevitability

A new report from the UN Environment Programme (UNEP) suggests the world is on course to temporarily exceed the Paris Agreement's 1.5°C warming target within the next few years unless policy ambition and emissions reductions accelerate significantly. This brings with it ever higher chances of extreme weather events, while raising the likelihood that the planet crosses irreversible climate tipping points. 

Despite this outlook, the report argues that the 1.5°C goal should not be abandoned. Instead, it advocates an “overshoot, peak and decline” pathway focused on rapidly cutting greenhouse gas emissions and scaling climate adaptation measures alongside carbon removal solutions, with the aim of quickly bringing temperatures back below the 1.5°C threshold later this century.

The report stresses that the extent and duration of any overshoot remain within policymakers’ control and that every fraction of a degree of avoided warming materially reduces long-term environmental and economic damage.

While the path to net zero may not be straightforward, the investment implications remain significant. For advisers, understanding how climate risks, policy developments and sustainability trends influence long-term returns continues to be an important part of client conversations.

As the likelihood of extreme weather events increases, understanding the potential impact on portfolios becomes ever more important. Explore our insight on how droughts and heatwaves can affect investors.

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