Study Reveals Decline in Perception Among Investors That Low-Carbon Transition is Inevitable

In a significant development, 93% of global institutions are either incorporating or planning to incorporate environmental and social impact factors into their investment strategies, signalling a balanced but increasingly clean energy-focused approach that integrates traditional and renewable energy sources while emphasizing net zero commitments, interim milestones, impact investing, and nature-related investments.

This trend is evident in the growing investment in clean energy, which is now more than twice that of fossil fuels. In 2025, global energy investment hits a record $3.3 trillion, with $2.2 trillion allocated to clean energy sectors like renewables, nuclear, grids, storage, low-emission fuels, and efficiency measures.

Investment in renewables, especially solar PV ($450 billion) and wind, dominates, with these sources becoming the leading suppliers of new electricity generation worldwide. Nuclear also sees a resurgence with significant investment growth. However, grid infrastructure investment ($400 billion annually) is lagging, posing integration challenges for renewables.

Institutional investors are increasingly anchoring their portfolios in renewable energy and related technologies such as energy storage, expanding capital deployment through both equity and debt vehicles. This includes private wealth investors entering clean energy markets for the first time, signalling broadening participation.

The shift is driven by a combination of climate-driven ambitions (net zero commitments), energy security concerns, and improving economics of clean technologies. Solar and wind costs continue to decline rapidly, improving returns and accelerating deployment beyond many government targets.

Alongside direct renewable investments, there is growing interest in impact investing and nature-related investments, recognizing the role of natural capital and ecosystem services in supporting climate goals and sustainable outcomes. Sectors such as water and waste management, pollution reduction, and recycling are emerging as key opportunities for nature-based investments.

The survey, conducted in October and November 2024, covered 800 institutions globally, spanning various regions and representing organizations with assets of more than $10bn and less than $10bn. Respondents to the survey were decision-makers at various types of institutions, including corporate pensions, public/governmental pensions, insurance companies, endowments and foundations, superannuation funds, sovereign wealth funds, and central banks.

Most institutions prioritize clean energy and carbon reduction, either as part of net zero goals or to capture compelling risk-return opportunities. Among institutions prioritizing nature-based investments, 79% are seeking strategies that proactively mitigate environmental degradation.

Interestingly, while 44% of institutions have net zero commitments, another 25% plan to in the coming 12 months. More than half of institutions with net zero goals have set interim 2030 targets, while 37% have established 2025 benchmarks. The vast majority of investors with 2025 goals (95%) say they are on track or partially on track to meet those targets.

Insurers are evolving their approach to responsible investing, focusing more on positive impact metrics and benchmarking to the United Nations' Sustainable Development Goals. Insurers are demonstrating a confident and sophisticated approach to portfolio construction, focusing on private credit, infrastructure, and sustainability-aligned investments.

55% of institutions are managing a separate sleeve in their portfolio for impact investments. Among those who do not intend to set net zero commitments, the majority (64%) still invest in clean energy strategies or reduce carbon in their portfolios.

In conclusion, the institutional investment landscape is undergoing a transformative shift towards clean energy, sustainability, and impact investing. This transition is supported by record funding flows into renewables, growing diversification of investor types, and emerging technologies integral to achieving deep decarbonization.

Study Reveals Decline in Perception Among Investors That Low-Carbon Transition is Inevitable