Matching available capital to sustainable projects and solutions was a central theme of the Climate Innovation Forum that we attended as part of London Climate Action Week.
The event, as a whole, was thoroughly upbeat with a cast of thousands willing to push the climate agenda forward. Many speakers talked about wanting to get out of the sustainability bubble and engage with the nay-sayers. IKEA’s Simon Henzell-Thomas made the rallying cry that t “we need to move from being climate evangelists to solutionists…” which was a prevalent sentiment t throughout the event.
Many debates focused on key climate challenges, reflecting the faith rather than conviction that they can be met, with mobilising $1.3 trillion of annual capital to fund climate change solutions by 2035 being the central challenge. Adaptation is now as important as mitigation for many corporates, which is a critical behavioural shift as the fear becomes a reality.
A Sustainable Aviation Fuel (SAF) focused breakfast only lightly touched on the substantial contribution that synthetic fuels will make to reducing the carbon intensity of aviation over the next 10 years. There was also a big focus on the insurability of climate risk and the ecological transition. Insurance is currently a ubiquitous commodity, but over time it will become a scarce resource and that is affecting economic decisions of corporates and individuals today. Discussions around supply risk and falling crop yields note that only 20% of that risk is being covered by insurance today. There is a huge vulnerability from credit droughts that will hit the system well before the physical droughts that may follow. At the heart of recent discussions between global investors and corporate leaders lies a growing concern that political turbulence may stall or even derail the momentum behind critical sustainability initiatives. As governments shift priorities and regulatory landscapes evolve, the risk of derailment looms large over the environmental, social and governance (ESG) agenda. Yet, despite these headwinds, one fact remains clear: ESG capital continues to represent one of the most significant and resilient pools of investment globally.
Today, nearly a third of global assets under management (AUM) are allocated to companies that are either actively driving or meaningfully participating in the transition to a more sustainable economy. This capital is not only vast in scale but also remarkably stable. While headlines often highlight short-term inflows and outflows, these fluctuations are typically minor and frequently misinterpreted when reported out of context. The underlying commitment to ESG principles remains strong, driven by long term value creation, risk mitigation and growing stakeholder expectations.
In this evolving landscape, companies face both a challenge and an opportunity. The challenge lies in navigating political and regulatory uncertainty while maintaining strategic clarity and investor confidence. The opportunity is to access those deep pools of ESG capital by aligning corporate strategy, disclosure and communications with the expectations of responsible investors.
Failure to engage meaningfully with ESG focused investors is more than a missed opportunity, it is a strategic oversight. Companies that neglect this growing segment risk not only reduced access to capital but also diminished competitiveness in a market increasingly shaped by sustainability considerations. Moreover, disengagement undermines the broader transition to a low carbon, inclusive economy, an outcome that carries consequences far beyond the balance sheet.
Our observations during Climate Action Week conclude with optimism and hope. There is sufficient motivation and capital to progress the transition and while the political bifurcation brings increased uncertainty, it does not diminish the importance or potential of ESG investment. On the contrary, it underscores the need for proactive, transparent and strategic engagement. For companies willing to lead, the rewards both financially and societally are substantial.
