Financing shift toward climate-aligned assets

Two of the largest capital reallocations in recent months have been driven by sustainability. In March, a major UK pension fund moved $35bn from State Street to Amundi and Invesco in search of closer ESG alignment. This week, a Dutch pension fund withdrew €14bn from BlackRock for the same reason. More money flows are happening behind the scenes without making it to the news. These are not isolated moves but part of a wider rebalancing: European and Asian LPs are reshaping their portfolios around sustainability, especially as US asset managers face pressure from Washington’s anti-ESG stance to halt their sustainability programs. The political backlash in the US was meant to end sustainable finance. Instead, it is accelerating a structural trend that started long before President Trump’s election. Large fiduciary institutions under public scrutiny (pension funds, insurers) cannot ignore environmental and social risks without compromising long-term value. That is why the integration of sustainability is not a passing fad but the new investment baseline. History shows that market forces tend to outlast governments and their political agendas. Ironically, the US crackdown against sustainability has had one positive effect in Europe. By casting ESG as overreach and boosting the global competitiveness of the American economy, it has made Europe look foolishly over regulated, especially on the sustainability front. A much needed wake up call as ESG practitioners were facing the risk of letting compliance become an end vs. a mean to an end. The conversation is shifting back to fundamentals: sustainability not as a reporting exercise, but as a tool to strengthen corporate resilience and long-term competitiveness. This new capital flow is the latest evidence that sustainability has been redefining what investors expect from their managers. Can’t wait to see more news like this one, and excited to see the sustainability space coming to its senses and refocusing on value creation.

India’s Green Financing Opportunity Could Shape a Century   India stands at a defining moment where a growing economic momentum meets an urgent climate imperative. The capital we choose to deploy today, and the priorities that guide this deployment, will influence not just our development trajectory but also the century that India shapes for the world.   At a global scale, the key outcomes from the recently concluded COP30 point towards the immediacy of climate action and the pivotal role of green financing. With strategic policymaking and the emergence of a climate-focused entrepreneurial ecosystem, India has a real opportunity to lead the global cleantech transition and achieve its commitment to reach net-zero by 2070.   Today, Green finance is powering innovation and scaling climate action while enabling entrepreneurship and opening avenues in infrastructure and job creation. At the heart of this transition is India’s rapidly expanding climate-tech or cleantech entrepreneurship ecosystem. Entrepreneurs are building impactful solutions across solar microgrids, battery storage, EV charging, carbon capture and sustainable packaging. According to a news report published by Inc42, Indian climate tech startups attracted over $2.2Bn in new funding over the last 18 months. Despite this momentum, early-stage climate ventures, especially in Tier 2/3 regions, often face barriers in accessing institutional capital. The government is addressing this through policy pivots that strengthen transparency and build confidence in the climate innovation ecosystem.   Subsequently, upper-layer NBFCs, lenders and development finance institutions are collaborating to bridge funding gaps. We are also seeing the rise of innovative financing structures, including blended finance models that combine concessional and commercial capital, thematic green funds to de-risk early-stage investments and ESG-aligned investment frameworks. These tools are helping channel capital to the most impactful and scalable climate innovations. As policy intent aligns with an expanding pool of capital, I truly believe India is well-positioned to become a global cleantech hub. This convergence of finance, innovation and sustainability promises to power India’s transition, strengthens local economies, create green jobs and ultimately shape the green trajectory of the next century not only for the Global South, but for the world.   Now is the time for policymakers, lenders, investors and corporations to take unified action. If India accelerates its green financing architecture with the same ambition as digital and infrastructure transformation, India could set a global benchmark for climate-led growth. The next century will be defined by those who fund the future and India is on the right track to lead the change.

Trends and expectations for sustainable investment 🌎 An insightful article from the Financial Times explores the evolving dynamics of sustainable investment in the context of heightened political and regulatory scrutiny. The analysis highlights a stark divergence between the United States and Europe, with U.S. institutions retreating from climate initiatives due to political pressures, while Europe remains the hub of global sustainable funds, accounting for 84% of such assets. Despite challenges, global inflows into sustainable funds continue, underpinned by Europe’s steady commitment to clean energy and sustainability-driven goals. The piece emphasizes the critical role of enhanced regulatory frameworks in shaping the future of sustainable investing. In particular, the UK’s Sustainability Disclosure Requirements (SDR) are poised to introduce stricter labeling standards for sustainable funds, addressing greenwashing concerns and fostering greater transparency. Such measures are expected to rebuild investor trust and ensure that funds genuinely align with their stated objectives, significantly reducing misrepresentation in the market. Another key takeaway is the shift away from the term ESG as a synonym for sustainable investing. ESG is increasingly recognized as a risk management framework rather than a sustainability metric, driving the adoption of more targeted investment approaches. Transition funds, which engage high-emission companies to facilitate their improvement, are emerging as a pivotal area of focus. Additionally, biodiversity and natural capital metrics are gaining traction, reflecting a broader understanding of environmental impacts beyond carbon emissions. Looking ahead, the future of sustainable investing appears both resilient and adaptive. The sector is evolving to meet rising global expectations through greater transparency, tailored investment solutions, and innovative engagement strategies. While political opposition in some regions presents challenges, the momentum toward sustainability-driven investments and the integration of advanced reporting tools indicate that the field is well-positioned for long-term growth and impact. #sustainability #sustainable #business #esg #climatechange #sustainableinvestment #investment

For too long, we’ve built our economies as if nature were free. We draw down forests, deplete soil and pollute water without accounting for the costs. Yet more than half of global GDP depends on natural capital. What would it look like if we accounted for our natural assets? If our financial system properly valued forests, soils, biodiversity, clean water and air, and pollinators? I want to share three examples from our portfolio showing how this shift works in practice: Amazonía Emprende (Colombia) In the Colombian Amazon, Amazonía Emprende is restoring degraded lands and building a native seed center to supply high-quality seedlings and support ecosystem restoration. Their target: restore more than 150,000 hectares by 2031. They’re also exploring biodiversity credits — developing baselines to monetize regenerated habitat so preserving and restoring the forest becomes a revenue-generating asset. This creates income opportunities for local and Indigenous communities, replacing activities that drive deforestation with ones that deepen the value of nature. SiembraViva (Colombia) SiembraViva works with smallholder farmers to shift from low-yield commodities to organic, value-added crops. By migrating to regenerative practices, farmers improve water retention, reduce erosion and build soil organic carbon. They see the soil itself as a natural asset — a reservoir of resilience and value. When we treat soil as a balance-sheet item, we see how degraded land is a liability and healthy soil an asset to businesses and local economies. BURN (Kenya) BURN’s efficient cookstoves replace charcoal and firewood use, cutting household fuel costs and reducing pressure on forests. Their technology enables roughly 60 percent less charcoal use compared to standard stoves, averting deforestation and saving millions of tons of wood. By reducing tree-cutting for fuel, BURN helps shift forests from a hidden cost line to a natural asset line, sustaining clean air and preserving biodiversity and climate resilience. When companies and investors ignore natural assets, they’re betting on an unsustainable future. When we account for them properly, we open the door to regenerative models that treat nature not as a free input but as a core asset. The Belem Declaration on Hunger, Poverty and Human-Centered Climate Action at #COP30 reinforces how interconnected our systems are. If we don’t measure nature and build it into our balance sheets, we risk losing it. If we value it properly, we can build economies that regenerate, not extract — and that speak to the truth that our dignity is intertwined with how we treat all living things.

The financial world is at a turning point. Climate transition is no longer an abstract concept but a defining driver of risk and opportunity. The Q4 management report of the FAMA Climate Turnaround Fund provides an in-depth analysis of repositioning investments within a new economic paradigm: decarbonization, innovation, and financial performance converge. The fund’s strong financial results in 2024 reflect this paradigm shift. The decarbonization of Brazil’s financial sector is urgently needed, particularly regarding financed emissions. The report examines Banco d context and details the urgent need to decarbonized investment. New regulations, shifts in value chains, and the repricing of climate risks radically transform the financial landscape, making it essential to understand these dynamics. The report also delves into stewardship, active engagement, and the intersection of science and markets in shaping high-impact solutions. For those seeking a deep understanding of how capital can be a catalyst for change and how tangible opportunities are emerging in this new reality, this report is a must-read.

💸 THE FUTURE OF CLIMATE FINANCE: 5 EMERGING MODELS THAT WILL CHANGE EVERYTHING We talk about trillions, yet many communities can’t access even millions. But I’ve seen a shift. After 18 years in this field — from UN negotiations to community projects — I’ve watched these models rise, often against the odds. ✅ Let’s talk about five that are changing how climate finance flows: 1️⃣ Debt-for-Nature Swaps 2.0 Not just restructuring debt. This is about creating real sovereignty. 🌿 Countries like Seychelles and Ecuador are combining debt relief with conservation and resilience, backed by private and philanthropic capital. 2️⃣ Blended Finance Platforms When markets hesitate, blended finance steps in. 💰 By mixing public, private, and philanthropic funds, these platforms unlock projects that traditional banks won’t touch — especially in adaptation. 3️⃣ Nature-Based Carbon Markets It’s no longer just about offsets. It’s about integrity. 🌱 Strong MRV systems and community benefit-sharing are now essential. Article 6 only works if trust is real. 4️⃣ Subnational Climate Bonds Cities are not waiting for national politics to catch up. 🏙️ Local governments are issuing green and blue bonds to fund resilience—faster, more directly, and with tangible local impact. 5️⃣ Loss & Damage Financing This isn’t charity. It’s justice. ⚖️ New funding mechanisms are emerging to compensate for irreversible harm. Equity, direct access, and transparent governance are now essential. 🌍 Where Do We Go From Here? These ideas are already shaping reality, 💬 Which of these do you see gaining traction in your work? #ClimateFinance  #BlendedFinance  #GreenBonds  #CarbonMarkets   #LossAndDamage  #NatureBasedSolutions  #ClimateLeadership   #FinanceForDevelopment  #ClimateAction

The Russell Family Foundation just showed what serious climate leadership looks like. They are not treating climate as a side program. They are using their entire balance sheet. Nearly 95% of their $100 million portfolio now aligns with their climate mission. They lead with investments, then support that strategy with grants. That is an amazing and disciplined shift in capital allocation. They invest in decarbonization, regenerative forestry, nature-based solutions, and community finance. They carved out an “aspirational” allocation for higher-risk catalytic investments that can unlock other capital. These include regenerative agriculture funds, community land vehicles, and early climate enterprises. This is how you crowd in capital. You commit first. We have seen what this looks like in practice. Over the past several years, we have supported The U.S. Endowment for Forestry and Communities, another leader, as it built and refined its impact investing program. That work focused on mobilizing private capital into forest health, sustainable wood markets, and rural economic development. The result is a strategy that ties investment discipline to measurable environmental and community outcomes. Foundations control flexible capital. They can move earlier. They can take thoughtful risk. They can be agile. They can shape markets. The Russell Family Foundation is blazing a path. More institutions should follow. https://lnkd.in/dW4cWEVA Jay Tipton Kerry Morrison Peter Stangel Peter Madden Trevor Cutsinger Kathleen Simpson, CPA Sarah Cleveland #impactinvesting #climatefinance U.S. Endowment for Forestry and Communities

➡️ Next up on our 2026 Private Markets Outlook series, which explores the five secular themes shaping the investment landscape, is Decarbonization. What does that look like today? Reducing carbon emissions is still the goal - but the playbook is changing. In private markets, sustainability is being built into underwriting, asset management, and capital allocation decisions across sectors. Technology is accelerating this shift, from infrastructure and real estate to agriculture. Why does it matter? Climate considerations are influencing investment strategies globally. For investors, decarbonization represents both risk and opportunity: · Assets aligned with evolving standards can benefit from stronger demand and resilience. · Those that lag may face higher costs or regulatory pressure across key markets. Decarbonization is also opening new growth paths in renewable energy, green building, and nature-based solutions. How does it show up in our work? 🌳 Natural capital: As one of the world’s largest managers of timberland and agriculture, Manulife Investment Management is leveraging nature-based solutions to sequester carbon and create other measurable ecosystem services. 🔌Infrastructure: Investments in renewable energy, electrification, and resilient networks are increasingly part of long-term planning and opportunity. 🏢🏗️Real estate: Green building standards, retrofits, and data-driven energy monitoring are becoming integral to asset management. Example: Our timberland team partnered with North Carolina State University to test precision nitrogen fertilization using satellite imagery and GPS-guided aerial application. The trial reduced fertilizer use by 5.5% and cut greenhouse gas emissions by approximately 650 tCO₂e, showing how technology and sustainability can work hand in hand. Decarbonization isn’t a one-size-fits-all mandate - it’s a growing lens for identifying value and managing risk in increasingly creative ways. Next up is Deglobalization and how supply chain shifts are reshaping opportunities in private markets. Access the full 2026 Private Markets Outlook here: https://bit.ly/4qWzrwm

Oil companies aren't scared of sustainable investing for one simple reason. They're getting the money anyway. Here’s the uncomfortable truth: Most "sustainable" funds can legally finance anything once the money clears. "Green funds" that finance fossil fuel companies. Sustainability reports with zero enforcement. Projects labeled renewable that change nothing. All while real climate projects stay unfunded. The missing piece is simple: accountability. Green bonds provide exactly that by adding one constraint: legal restriction on fund use. Same structure as any bond. Lend money. Earn interest. Get repaid. But the capital can only fund verified environmental projects. Renewable energy. Clean transport. Green buildings. Water systems. → Governments or companies issue bonds for specific climate projects → Independent evaluators verify projects meet environmental standards → Capital flows only to certified projects → Issuers publish impact reports: CO₂ avoided, energy generated, infrastructure built Companies issuing green bonds cut emissions by over 10% in four years, with emissions per dollar of revenue dropping 30%. From 2010 to 2023, green bonds allocated 40% to renewable energy, 25% to efficient buildings, 15% to sustainable transport. France's €7B sovereign green bond prevents 2 million tons of CO₂ annually. The model works. The market proves it. But scaling it needs three things solved: 1) Institutional-grade validation Investors need confidence that capital flows into truly sustainable projects. Secured Carbon uses AI-driven financial engines to match verified clean-energy projects with institutional investors, ensuring transparency and measurable impact. 2) Retail investor transparency Retail investors struggle to understand the real impact of their “green” portfolios. GreenPortfolio helps individuals track, score, and compare the climate performance of their investments to avoid greenwashing. 3) Tokenized access to climate assets Sustainable real assets often remain out of reach for most investors. @ClimateKick leverages Web3 and tokenization to open fractional investment opportunities in verifiable, climate-positive infrastructure. The infrastructure is there and the capital is moving. Over $3 trillion has flowed into climate infrastructure through green bonds since 2008. More than half of that in just the last few years. When legal restrictions replace vague promises, capital moves. Which brings us to the bigger question: Should every climate fund be legally required to restrict where money goes, or should investors decide what level of accountability they want? And that's day 19, of Climtober - 31 days of demystifying climate solutions, one topic at a time. Come back tomorrow for Day 20 and by November 1st, you'll understand the landscape better than most people working in it. Looking to tell effective stories for GTM in Climate? Check the pinned comment.

A reflection on the evolving theme of "transition finance" from #GreenBiz25: Despite the net zero alliance exodus by major American banks, there's strong institutional commitment (72 of top 100 global FIs have #netzero targets). But the real work is in creating workable financing structures for complex decarbonization projects. The future of #transitionfinance isn't about creating a new asset class, but about adapting existing financial tools to support decarbonization and shifting from debates about definitions to practical implementation, particularly in hard-to-abate sectors where green finance doesn't fit (CDP: 100 companies are responsible for 71% of global GHG emissions in my lifetime). As J.P. Morgan's head of sustainability policy Linda French has made clear, "finance will only move when there’s an economically viable business case ... taxonomies and disclosure frameworks on their own do nothing to finance flows, and even risk becoming a distraction.” You could say finance is about moving money to make more money, but it can also be about supporting existing clients, using the money they're already getting to accelerate their own transition plans and actions. The key element is that transparency and accountability will allow us, as Dr. Elizabeth Harnett shared at GreenBiz 25, to "assess whether transition finance is really happening and what the activity is having on the world. We don't want to get 10 years down the line and realize that transition finance made absolutely no difference." Thanks to Jeffrey Schub for sharing real-world examples from Wells Fargo, and for Tobi Petrocelli, PhD, Ethan Gilbert, LEED AP and Carletta Ooton for bringing transition finance conversations to life. Jeffrey Schub's transition finance take for Trellis Group: https://shorturl.at/CbdUY Center for Climate-Aligned Finance's transition finance resource hub: https://shorturl.at/qqr9b