2025 was the year of the transition, now investors must lead
2025 was a year defined by contradictions. We witnessed intensifying geopolitical realignments, heightened energy security concerns, and climate policy reversals in major economies. Yet, the transition is happening — at scale, globally and irreversibly — because economics are driving it. In this moment of turbulence, investor leadership, bipartisan policy engagement, and disciplined long-term strategy matter more than ever.
Some of my takeaways from 2025 include:
The economics of the transition outpaces the politics
This is the paradox of the present. Global clean energy and grid investment is projected to reach $2.2trn in 2025 — twice the flow into fossil fuels — and wind and solar already make up more than 90% of all new power capacity worldwide. Electric vehicles accounted for one in four cars sold globally and half of all sales in China. This is not ideological — it’s market-driven.
Even in markets with political pushbacks, the underlying economics remain decisive. Despite federal rollbacks, in 2025 solar and wind represented over 90% of all new power capacity added in the US. Meanwhile Brazil, India, and South Africa delivered record renewable additions, backed by new taxonomies, permitting reforms, and procurement programs.
The momentum is structural — driven by cost, technology, corporate demand, and competitiveness — and continues to accelerate irrespective of political cycles.
Policy headwinds require investor engagement, not retrenchment
2025 underscored the challenge of navigating an increasingly polarised policy environment, particularly in the US. Hundreds of bills have been introduced since 2023, attempting to redefine fiduciary duty, restrict the integration of material climate risk, and politicize routine investment practices. Fewer than 8% have passed, but the attempts continue.
This is why investors must step up, not back. Fiduciary duty requires acknowledging climate risk as financial risk; ignoring it is the greater violation. Investors cannot relinquish the freedom to assess long-term economic trends and protect beneficiaries.
The Freedom to Invest initiative — and the growing number of centre-right leaders defending market-based approaches — highlights the long-term viability of bipartisan engagement.
From pledges to performance: Climate strategies grounded in the bottom-line
In 2025, investors moved beyond high-level climate pledges toward strategies anchored in real-economy performance and financial fundamentals. Rather than emphasizing portfolio-wide net zero optics, capital increasingly flowed to well-grounded companies and assets positioned to create value in a caron-constrained world and avoid stranded-asset risk. This shift translated into a stronger focus on asset-level decarbonization – improving emissions performance through operational efficiency, technology upgrades, and credible, investment-grade transition plans that directly influence outcomes on the ground.
Additionally, investors broadened their lens to include adaptation and resilience as core value drivers, with growing attention to wildfire mitigation, extreme-weather risk management, water infrastructure, and efficiency solutions across industries. Climate strategy, in short, became less about signaling ambition and more about protecting and enhancing long-term returns.
2026 and beyond
Looking forward, several cross-cutting themes are poised to shape investor strategies:
The geopolitics of clean energy supply chains
Tariffs, industrial policy, and “AI sovereignty” are accelerating demand for reliable, fast-to-deploy clean energy. Solar + storage + gas peaking is the fastest way to meet exploding AI power needs. Moreover, as national politics fluctuates, corporations, cities, and states continue to push for clean energy through procurement, reporting mandates, and resilience requirements – creating powerful bottom-up demand signals.
Global capital flows toward EMDEs
Investors focus on emerging markets and developing economies, where energy demand is rising fastest, and clean infrastructure needs are most acute. EMDEs are becoming central to growth-oriented climate strategies as investors seek diversified returns and real-economy impact. For instance, recent Ember analysis shows how the emerging markets are propelling the global EV boom.
Scaling proven solutions
With technology and business models increasingly validated, attention is shifting from piloting to replication at scale. Investors are prioritizing deployable solutions — in renewables, resilience, and nature-related investments — and building clearer pathways for commercial scale-up and capital recycling.
Transition plans as strategic signals
Transition plans are emerging as one of the most effective tools for communicating expectations to managers, policymakers, and portfolio companies, signaling that climate and clean energy strategy is central to risk management and opportunity.
The climate transition is not a political stance – it’s the trajectory of the global economy. Ignoring it is no longer prudent risk management. The transition will continue to advance – globally, rapidly, and irreversibly – driven by economics, innovation, and resilience needs.
As we enter 2026, investors must stay disciplined and engaged. Leadership now means allocating strategically toward the energy system of tomorrow: cleaner, more diversified, more resilient, and unmistakably global.