What will define climate leadership in 2026? At the BMO Climate Institute, we’ve been tracking the headlines, listening to leaders, and analyzing the data.

The past year saw plenty of exciting developments and headlines worth paying attention to – from promises of Artificial Intelligence (AI), to AI’s impact on energy demand and water stress, to the growth of clean energy technologies. Through our research and publications, interviews with cross-sector leaders on our Sustainability Leaders podcast, and convenings, four themes have emerged as central for business leaders to understand and thrive in the year ahead: innovation and adaptation, energy supply and security, business strategy and momentum, and resilience.

Adaptation to climate risks is a day-to-day reality, and building resilience into business operations is already taking place today. It’s necessary not just to survive, but to thrive.

To adapt to climate change, leaders we spoke to at a BMO client event emphasized that innovation is no longer optional—it’s existential. Grégoire Baillargeon, President, BMO Quebec, Vice Chair, BMO Capital Markets, and Vice Chair of the BMO Climate Institute, captured this shift:

“We’re not just financing solutions—we’re helping build the ecosystems that make them scalable. Carbon removal, clean hydrogen, and AI-driven energy systems are no longer fringe ideas. They’re the future of competitive advantage.”

From fusion energy to carbon dioxide removal, the pace of climate innovation is accelerating and will continue to do so into 2026, especially due to the tangible economic benefits of clean energy and other sustainable solutions. AI has the potential not only to be a tool for greater efficiency in corporate operations but also help support accountability to sustainability objectives. We continue to see companies investing in R&D to commercialize climate solutions that may not necessarily be market-ready, signaling a shift from ambition to execution.

But innovation alone is not enough – it must be accompanied by large-scale adaptation to the shifting physical and economic reality of a changing climate. Recent years have marked a shift in climate investment from a focus on mitigation toward an increasing emphasis on adaptation and resilience measures. Stakeholders have more access than ever to the data and tools to quantify and adapt to shifting risks in a way that directly supports their goals. We anticipate that this emphasis will endure and grow in 2026, especially considering the increasing economic cost of natural disasters, warning signals from the insurance industry, and dialogue around how to build communities back stronger.

With the exponential growth of AI, and its anticipated demands for both energy and water, we spent much of 2025 exploring developments related to the growth of innovative energy solutions to help address growing needs. Complex geopolitical priorities have fundamentally reframed topics such as renewable energy and grid resilience as primarily related to national security, with climate considerations as an ancillary benefit.

From nuclear fission, to fusion, to natural gas and energy storage – energy supply and domestic security will continue to be top of mind into 2026 and beyond. In the coming year, we expect the role of transmission and distribution infrastructure to take center stage, alongside continuing dialogue around the permitting reform for major energy projects.

Real progress is happening across sectors, and the pace of climate action continues to accelerate. The 2025 BMO Climate Institute Business Leaders Survey revealed a growing alignment between climate action and business value. Nearly 70% of North American companies now have a climate plan or are developing one, up from 65% in 2022. ‌

Climate Leaders are more likely to believe their companies operate better with climate plans in place. A third of Climate Leaders (33%) say their companies can be more profitable by addressing climate change, higher than 22% among other companies. In addition, 38% of Climate Leaders say their companies can be run more effectively with established climate plans, 11 percentage points higher than other companies. These companies are also responding to rising customer expectations, with 48% citing this as a key driver for climate action.

Supply chain resilience is another critical consideration for business leaders, as well as a lever for climate action. Enterprise procurement continues to be an important driver of more sustainable business practices, including resource efficiency and greenhouse gas emissions reductions. Large companies can influence their supply chains with policies that incentivize the achievement of carbon reduction targets and give preference to suppliers with meaningful strategies in place to improve their resilience to disruptions like those due to extreme weather.

As Sherrie O’Doyle, who leads sustainable procurement for BMO, explained, procurement is not just a strategy to drive down emissions, it’s also an important platform for collaboration and sharing of best practices among companies of different sizes and scale, and an opportunity for companies to differentiate themselves among their competitors. Not to mention an important hedge against rising energy costs.

We expect that in 2026, the business case for operational resilience and supply chain engagement will become stronger by necessity as stakeholders seek to quantify associated benefits. A growing catalogue of best practices will support the continued integration of climate-linked action into business strategy.

Resilience has emerged as a strategic imperative for companies navigating the impacts of a changing climate, evolving customer and investor expectations, and a changing policy environment. The Sustainability Leaders podcast explored how insurers and developers are adapting to extreme weather risks. As Maryam Golnaraghi, Director of Climate Change and the Environment at the Geneva Association highlights:  

“Over the last three decades, insured losses have accounted for around 30% of total economic losses from rising extreme weather. And when you look at insured losses over the last three decades, they have risen from around $20 billion on average per year to over $100 billion.”

This encourages investments that build resilience and reduce that risk, she notes. For example, in Los Angeles, cleantech startups are partnering with public agencies to rebuild communities after wildfires, demonstrating how innovation and collaboration can strengthen urban resilience and amplify impact. We expect this shift to endure into 2026 and beyond, as governments and other stakeholders seek to mitigate the increasing impact of natural disasters.

As we look ahead, the convergence of headline-making innovations, pragmatic business strategies, and cautious optimism are shaping a future where climate action is both urgent and full of possibility. The past year has shown that ambition can spark progress, headlines can drive awareness, and hope can fuel resilience. Whether through bold technological breakthroughs, data-driven adaptation, or cross-sector collaboration, leaders are finding new ways to thrive in a rapidly changing world. The momentum is real: climate action is no longer just about managing risk – it’s about seizing opportunity and building a more sustainable, resilient, and prosperous tomorrow.

How will your organization adapt, innovate, and lead in the coming year?