Long-term focus in private climate investments

Sustainability in Private Markets 🌍 Great report published by BCG in collaboration with the ESG Data Convergence Initiative, showing how private markets continue to integrate sustainability into investment strategies and create measurable financial value. Private equity firms are proving that sustainability drives performance. The report highlights EBITDA gains of 4% to 7% over the investment period directly linked to sustainability initiatives. These results confirm that actions such as decarbonization, operational efficiency, and better employee experiences contribute to stronger business outcomes. Sustainability is becoming an enabler of profitability and competitiveness across private markets. One key trend is the growing emphasis on short-term emissions reduction targets. Private companies are prioritizing actions that can deliver tangible progress and measurable results within defined timeframes. This focus reflects a shift toward implementation and accountability. Firms are aiming for outcomes that strengthen resilience, reduce risk, and improve operational performance in real terms. Another finding is the strong job creation performance of private companies, which continues to outpace public peers despite a challenging economic environment. This suggests that sustainability-linked management practices can strengthen both growth and social impact. Areas such as renewable energy adoption and board diversity still require attention. Yet, within the holding period, private companies tend to make faster progress across several sustainability metrics than their public counterparts. The long-term approach and active ownership model of private equity provide a powerful platform to embed sustainability deeply in business transformation. These firms can influence strategy, culture, and investment decisions at every level of the organization. The dataset behind this report is extensive, including over 9,000 portfolio companies and 320 general partners across private equity, infrastructure, and private credit. It offers valuable insights into the scale and direction of sustainability integration. BCG’s analysis reinforces that sustainability creates value when embedded in the core of business and investment practices. It aligns operational priorities with financial performance and accelerates progress across industries. For investors and business leaders, the message is clear. Integrating sustainability into investment decision-making enhances returns, strengthens resilience, and positions companies to thrive in an evolving market environment. The full report, Sustainability in Private Markets 2025, provides an important reference to understand how sustainability continues to evolve as a defining factor in long-term value creation. #sustainability #business #sustainable #esg

Here’s what I learned from London Climate Action Week 2026. My daughter's sports day was cancelled, and schools all over London closed early. The week started with a rare red heat warning. Suddenly, climate risk was no longer just an idea for anyone living, visiting, or working in London. We could feel its impact in the local economy, which our portfolios already rely on. But the mood at LCAW wasn’t one of crisis. Instead, people focused on resilience and what we can achieve quickly and at scale. The conversation shifted from systemic risks to how climate affects asset values, returns, member outcomes, and the world our members will retire into. Floods, heat, drought, water quality issues, and supply chain disruptions turn into operational risks, which then become financial risks, and finally portfolio risks. This chain is what makes investments in adaptation and resilience possible. What felt different at LCAW was that the market is beginning to form around that logic. Companies and infrastructure owners need resilience, and some are now willing to pay for it. Nature-based projects are becoming capable of delivering measurable outcomes. Long-term capital needs diversified, cash-flow-driven returns. Bring those three things together, and we build a scalable, repeatable and investable market. There were clear signs of progress throughout the week. APG, the €600bn manager behind ABP, launched a dedicated Private Natural Capital allocation. Aviva announced that it had already invested £87m in rainforests, peatlands, and salt marshes. The Flood Action Coalition brought together corporate buyers, insurers, and infrastructure owners. In the Evenlode catchment, more than 50 farms and over 3,000 hectares demonstrated how place-based resilience works when buyers such as Network Rail and SSEN pay for the outcomes their assets rely on. You can find our Rebalance Earth LCAW 2026 summary attached below. #NaturalCapital #NatureFinance #ClimateResilience #Infrastructure #LondonClimateActionWeek #Pensions

The world allocates roughly nine times more capital to climate mitigation than to adaptation. Mitigation means reducing emissions, solar panels, wind turbines, electric vehicles. Adaptation means learning to live with the climate we already have, resilient irrigation systems, urban infrastructure prepared for extreme weather events, heat-tolerant crops. Both matter. But the gap between them is too large to be explained by necessity alone. The more interesting question is not simply to note this asymmetry. It is to understand why it persists. The honest answer has little to do with climate and a lot to do with the nature of capital. Mitigation has a quality that financial markets love: it is scalable, standardizable, and narratively compelling. A renewable energy fund can be replicated across dozens of countries using the same thesis, the same financial model, the same LP presentation. The story tells itself, and it points toward a better future, which is psychologically powerful for investors who want meaning beyond return. Adaptation is the opposite. It is local, fragmented, and narratively thankless. An early warning system for floods in coastal Bangladesh has nothing in common with a desalination project in sub-Saharan Africa, except its function. There is no elegant global adaptation fund because the nature of the problem resists standardization. And capital markets have always struggled to allocate efficiently toward what they cannot standardize. There is a second layer. Mitigation finances a transition that will benefit future generations, and that carries obvious moral appeal. Adaptation finances the survival of populations being impacted right now, predominantly in lower-income countries. It is an ethical distinction that climate discourse rarely confronts directly: much of green capital is more interested in building tomorrow than in protecting today. For the long-horizon investor, this asymmetry is both a market design failure and a genuine opportunity. Demand for adaptation is inelastic. It does not disappear with a change of government or a shift in energy policy. Whoever can develop financing structures that work for local, fragmented, lower-liquidity assets is opening a frontier that markets have not yet learned to cross. The energy transition has no shortage of capital. Climate resilience is still waiting for its investors in scale.

In recent posts, I’ve critiqued two widespread fallacies in sustainable investing: - That understanding “#systemicrisk” will somehow lead investors to mitigate planetary risks. - That entity-level targets and disclosures—no matter how rigorous—can drive the systems-level transformations we need. This post offers a constructive alternative: what pragmatic climate investment actually looks like. First, we need to stop conflating two distinct tasks: managing risk and addressing climate change. Managing financial and physical risks is essential—but it is not the same as financing decarbonization. Misunderstanding this distinction has led to frameworks that create at best, ineffective, and at worst, perverse, outcomes. Addressing climate change requires financing transformative systems change: reshaping energy systems, transport, industry, and digital infrastructure. These transformations cannot be delivered by the sum of firm-level targets or strategies, nor by any reallocation of capital by financial firms alone. They require multi-actor coordination around coherent roadmaps—combining technology pathways, institutional reform, enabling policy, and investment strategies. These are the transformations that will have the most decisive impact on decarbonizing our economy. They are not theoretical or impossible. They’re mapped out in reports like the International Energy Agency (IEA)’s Net Zero by 2050, as well as many regional and sectoral pathways. And yet, we remain far off course from global climate targets precisely because we are not orienting our actions around these roadmaps. Instead, we’ve focused on corporate commitments and disclosures that are not proxies for real decarbonization. They neither incentivize nor reflect the systemic changes required. Many of the most critical investments must happen in EMDEs, where future emissions growth will be concentrated. But most institutional investors do not invest in these markets due to high perceived risk (not a single low-income country is deemed credit-worthy by CRAs). That’s why a core part of pragmatic climate investing is addressing the actual barriers to capital mobilization: lowering the #costofcapital in EMDEs, designing innovative risk-sharing mechanisms, and the strategic use of public finance and guarantees to catalyze private investment. These challenges are structural—but solvable. Improving risk assessment and resilience is also essential. We need better integration of science and risk tools to inform strategic investments in adaptation and resilience. But this work must not be confused with—or take priority over—the urgent need to finance mitigation at scale. With clarity on these distinctions, and alignment around real decarbonization roadmaps, we can move from misplaced proxies to effective strategies—and deliver the transformative outcomes the planet urgently needs. Columbia Center on Sustainable Investment Darius Nassiry Allan Marks Mahmoud Mohieldin De Rui Wong

➡️ Asset owners need to lead on investor climate action To inform our report “What Can Investors Do About Climate Change?” we ran workshops with over 60 investors around the world. One of the clearest messages was this: asset managers will not take climate action without clear backing from asset owners. The reason is structural. Asset owners often see climate change as a long‑term, system‑level risk to beneficiaries. Asset managers, by contrast, operate within specific mandates, are assessed over shorter horizons, and must navigate divergent client views. Yet we heard that climate stewardship is frequently: ❌ Not built into mandates ❌ Not reflected in benchmarks or manager evaluation ❌ Not resourced commensurate with its stated importance ❌ Not considered in the context of potential performance trade-offs The result is a say-do gap: statements of intent on the one hand, commercial and legal constraints on the other. This matters, because asset managers will only act in accordance with the authority clients given them and the incentives they face. For asset owners the implication is straightforward: if they believe climate action is required by fiduciary duty then that belief needs to be reflected explicitly in mandates, resourcing and evaluation. Asset owners who place a particular weight on climate may need to go further. Assessing the quality of stewardship is nuanced and costly. Crude proxies such as voting record or a simplistic focus on “outcomes” can miss what really matters. One response is to place greater weight on firmwide alignment of climate beliefs and philosophy when selecting managers. This increases confidence that climate considerations are built into day-to-day investment actions. Aligned asset managers and can also help with policy advocacy, which typically happens at the firm rather than fund level. Managers who have clients with sharply opposing views on climate change will find it tough to step into policy discussions. Not every mandate awarded needs to be a climate mandate – different managers can play different roles. But asset owners who are deeply concerned about climate change should consider whether manager selection gives enough weight to firm-wide climate alignment, as well as ensuring that climate stewardship is factored into mandates and manager evaluation. Global School of Sustainability at LSE Environmental Defense Fund Hans-Christoph Hirt, PhD Andrew Howell Kristin Lorenzo Fernanda Gimenes Guillaume Morauw

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

Long-term investing and long-term physical climate risk share more than just time horizons—they require the same discipline: recognizing compounding exposure BEFORE it becomes existential. Lately, I’ve been reflecting on the parallels between long-term investing and long-term climate resilience. As a product leader working at the frontier of climate and financial risk, I found the 2025 Berkshire Hathaway Annual Meeting particularly relevant. Warren Buffett and Ajit Jain didn’t just mention climate; they emphasized how risks like wildfires and hurricanes are now central to underwriting, infrastructure strategy, and ultimately, investment returns. Here are a few takeaways that align with what I see daily at the intersection of climate, finance, and analytics: 🔁 Long-term investing & long-term physical climate risk: Some shared principles - Whether compounding capital or physical climate exposure, surprises are costly—often exponentially so. - Physical climate risk mispricing, like market mispricing, demands quantitative skill to detect and decisive action to rectify. - Resilience is the TRUE long-run multiplier. This could take the form of diversification across portfolios and mitigation across hazard. - Greg Abel emphasized that “every investment must be fully understood and evaluated with a long-term mindset”. A similar mindset helps quantify materiality from physical risk. 🌍 Where climate hazards meet investment risk - As Buffett noted: “Wildfires are massive, growing, and increasingly unpredictable.” - Ajit Jain confirmed that extreme weather is reshaping underwriting models, with Berkshire among the few firms willing and able to carry that risk. - Hurricanes are now repricing entire insurance portfolios; one active season can stall billions in energy infrastructure. - Volatility reshapes utility sector yield profiles, liability exposure, and insurance strategies. If you’re in investing across real estate, insurance and infrastructure, it’s time to reframe physical climate risk as a core financial question. This isn’t just an academic discussion, it’s foundational to modern capital allocation. You can find the full BRK AGM recording: https://lnkd.in/gRYD-SKQ If you’re thinking about risk repricing in decades, not quarters, I’d love to connect. #ClimateRisk #LongTermInvesting #BerkshireAGM #Utilities #WildfireRisk #Insurance #GeospatialAI #Resilience #CapitalMarkets #Finance

➡️ 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

One of the biggest misconceptions in #ClimateTech investing is that capital alone will drive the success in this sector. But after spending time working with climate-focused founders, evaluating investment opportunities, and tracking key trends, I’ve realized that the most valuable investors bring more than just capital—they bring deep networks, real founder relationships, and the ability to unlock non-obvious opportunities. I spent over 100hours in the past month catching up with the most promising early-stage climate tech founders in Africa and emerging markets. It's not just about building a solid pipeline, but also tracking these startups to understand their unique challenges firsthand, and see where smart capital can drive outsized impact. 🚀 A few things I’ve learned along the way: ✅ The best deals don’t come from cold inbound—they come from trust. Many of the most promising climate founders I know don’t actively fundraise in traditional ways. They prioritize investors who understand the long-term commercialization journey. ✅ Sourcing is an art - The ability to identify non-obvious climate opportunities before they hit mainstream VC radars is where the alpha is. Some of the best companies I’ve engaged with are led by technical founders who need investor-partners that understand both science and scale. ✅ Support is everything - Writing the check is the easy part. But actually helping a climate startup go from lab to market, navigate regulatory complexity, and access global expansion channels? That’s where real value creation happens. Looking at firms like Planet A Ventures, Delta40 Venture Studio, Pale blue dot, and Satgana I see a common theme—they don’t just invest, they build ecosystems. ClimateTech isn’t just an investment category; it’s a once-in-a-generation opportunity to drive both transformational impact and financial returns. For me, it’s about knowing which founders are quietly building game-changing solutions, long before they hit the headlines. It’s about understanding that the right capital, at the right time, with the right support, is what turns a promising startup into an industry-defining company. #ClimateTech #VentureCapital #FounderNetworks #DealFlow #DeepTech #ClimateFinance #ImpactInvesting

Following my post last week about the concerning and over simplistic rhetoric from UK Government on planning, citing nature as a blocker rather than an enabler of good, integrated growth, this piece supports the case that business sees green investment, often made upfront, as underpinning economic growth.    PwC surveyed 4,701 chief executives representing every region of the world economy and found that most CEOs see sustainability as an opportunity, not an additional cost.   PwC cites that the trend is being fuelled by growing evidence that green investments boost revenue and improve profit margins, alongside increasing alignment between executive incentives and sustainability metrics. They found that such investments were six times more likely to increase revenue than decrease it. For example, companies transitioning their product portfolios to include climate solutions are seeing faster revenue growth, according to research from Harvard Business School.   Additionally, two-thirds of the CEOs surveyed reported that climate related investments had either reduced costs or had no significant impact on costs. And investors are responding - nearly 70% of respondents to PwC’s Global Investor Survey 2024 agreed that businesses should address sustainability and ESG issues, even if it impacts near-term profitability.   This last point is crucial – investors are taking a longer term view and there's an understanding that aligning climate-friendly investments with long-term business strategies drives stronger financial performance. It’s great to read about this progress within business, and I'm looking forward to delivering the biodiversity keynote at Edie 25 in March to support more businesses to take action on nature alongside climate.   In a world of increasing complexity, the UK Government's reductive rhetoric distracts from the urgency of the issues at hand and risks derailing good, integrated progress on all fronts - environmental, economic, and societal.   Read the piece I reference via edie here: https://lnkd.in/enG-k7hR #Planning #ClimateChange #ESG #Business