Study Shows Decline in Viewership Among Investors Regarding Inevitability of Low-Carbon Transition
In the ever-evolving world of finance, institutional investors are taking bold steps towards a sustainable future. The current trend is characterized by a strong focus on transition finance, climate adaptation, natural capital, and integrating carbon costs into investment decision-making.
This shift is reflected in the increasing embedding of climate-related risks and targets into investment strategies. There is a growing emphasis on net zero goals, clean energy investments, impact investing, and nature-related allocations.
Transition finance and climate adaptation have become top priorities for ESG investors in 2025, as they move towards investments that support the broader climate transition and resilience against climate change impacts. Asset owners are factoring in the cost of carbon, including internal carbon pricing and shadow carbon prices, into their long-term portfolio strategies and risk assessments.
Net zero transition planning in equity investments now involves setting clear strategic ambitions, using specific metrics and targets, implementing adaptive strategies, and engaging companies and policymakers to foster an enabling environment for transition. This includes forward-looking analysis and responsive governance mechanisms.
The role of clean energy is growing, with expectations that if companies meet existing emission reduction targets, significant cuts in emissions could be achieved. While there is some cautiousness around meeting all targets fully, technological advances and scale in renewables capacity are reinforcing confidence in the energy transition's progress.
Nature-related investments and natural capital are rising in importance as part of sustainable and impact investing, reflecting broader ESG frameworks that incorporate ecosystem services and climate adaptation benefits.
Broader climate-related risk assessments now include sovereign-level evaluations relevant to investment decision-making in sovereign bonds, recognizing the need for comparable, comprehensive data on countries’ climate transition performance.
These developments reflect an institutional investing landscape that is increasingly sophisticated, nuanced, and aligned with achieving net zero emissions, supporting the energy transition, and driving impact through climate and nature-related finance. Effective investment mandates and active stewardship are central to this evolving approach.
Insurers are demonstrating an increasingly confident and sophisticated approach to portfolio construction, focusing on private credit, infrastructure, and sustainability-aligned investments. Among those prioritizing nature-based investments, 79% are seeking strategies that go beyond sustainability to proactively mitigate environmental degradation.
Even among those who do not intend to set net zero commitments, the majority still invest in clean energy strategies or reduce carbon in their portfolios. More than half of institutions (51%) with net zero goals have set interim 2030 targets, while 37% have established 2025 benchmarks.
Sectors such as water and waste management, pollution reduction, and recycling are emerging as key opportunities for nature-based investments. The survey covered 800 institutions globally, spanning North America, Europe, Middle East and Africa, and Asia Pacific in October and November 2024.
In summary, institutional investors are moving from simple exclusion or screening towards integrated, dynamic, and multi-lever strategies that balance risk management with capitalizing on opportunities in clean energy, low-carbon technologies, and natural capital investment domains. This shift is a testament to the growing recognition of the urgency and importance of addressing climate change and promoting sustainability in the financial sector.
- In 2025, environmental science, specifically transition finance and climate adaptation, have become crucial aspects for ESG investors, as they aim to support the broader climate transition and resilience against climate change impacts.
- Asset owners are considering not only clean energy investments but also nature-related allocations, recognizing the importance of natural capital and ecosystem services as part of sustainable and impact investing.
