Finance ministers were out in full force at last month’s COP30 climate summit.
A coalition of finance ministries from around the world – including China, the EU, the UK, Saudi Arabia, Australia, India, Canada, the Netherlands, Germany and South Africa – drew up more than 100 recommendations for scaling climate investment.
They included potential regulatory interventions, concessional finance, the reform of multilateral development banks (MDBs), new national frameworks, and innovative financial instruments.
Investor requests
“The Brazilian [COP30] presidency really sought to bring finance ministries into the discussions around the role of private finance, which has been helpful,” says Wendy Walford, the head of climate and nature risk at Legal & General.
Walford co-leads the policy work of the Net Zero Asset Owners Alliance (NZAOA), which made its own recommendations for how rule makers can help its 87 members overcome the structural barriers to green investment.
“Asset owners have been really grappling with the details of these problems, and getting a better understanding of what needs to be done,” Walford tells IPE.
Top of the list is the need for more evidence that national climate commitments will actually be implemented, so that investors can throw their weight – and their capital – behind projects and sectors that will drive the long-term transition.
This will require the development of country and sectoral roadmaps detailing how governments think they will achieve their national targets, and the incentives and penalties they are likely to introduce to help them get there.
“We need a policy environment and economic case that enables companies to make the changes they need to, and gives investors the confidence to support them,” says Walford.
But it’s not just policy, she continues. “We can only invest in the real world – we don’t create new things – so we are dependent on there being suitable projects.”
Nathan Fabian, chief sustainable systems officer at the Principles for Responsible Investment (PRI), says this is one of the biggest hurdles going into 2026.
“Improvements are still needed on what an investment-ready pipeline of assets look like,” he explains. “Plans on paper aren’t enough.”
More investable projects
Fabian believes investors “need to be able to bid their interest for specific deals”. But many investors are not happy with what they are seeing so far.
Bertrand Millot, the head of sustainability at Canadian pension fund La Caisse, says “there are not enough well-prepared tenders out there” for institutional investors to bid for.
“The question of tenders is very important,” he told an audience at the PRI’s recent annual conference in São Paulo, adding that pension funds can’t prepare projects or advise on transactions the way that banks can.
“Finance is a bunch of different animals,” he said, telling IPE on the sidelines of the event that this fact often “fails to be understood” by those creating deals.
Millot thinks governments and finance ministers must better understand what is needed to make a project suitable for investment.
Walford agrees, and says asset owners need to be part of the conversation from the start.
“If there’s an increasing expectation that private capital is going to support climate outcomes, we should be involved, to make sure the approaches being taken are suitable – that they don’t risk crowding out private capital, for example.”
Those conversations should be held early on in the process, she continues, “to avoid unintended consequences”.
Deal flow in emerging markets
There are some signs of progress on this front.
The UK’s Green Finance Institute (GFI) launched an initiative called ‘Transactions to Transitions’ last month, to create more investment opportunities in the space.
“A few years ago, everyone tried to equate climate risk with financial risk,” says James Hooton, managing director of mission at GFI.
“And finance people responded by saying: ‘that’s not how this works – we can’t just create markets and then chuck a load of money at them’.”
Through T2T, he explains, GFI is “looking to drive a connection between what the government wants and what the deal flow looks like” – in partnership with companies, financial institutions, policymakers, technical experts, development banks and philanthropy.
The initiative is already working with around seven countries to map their national climate plans to deals.
“In Brazil, for instance, we’ve booked a pipeline of about $2bn-worth of transactions, which I’d expect to start coming online in 2027,” says Hooton.
While the initiative is currently focused mostly on project and bank finance, T2T’s objective is ultimately to create new asset classes that are relevant throughout the capital stack.
Fabian says he is hopeful that policymakers are starting to hear investors when they say they need climate projects and instruments to be structured and priced similarly to their other investments, and that MDBs must be better resourced to help bring such deals to market.
“I think we’re seeing real progress here,” he tells IPE.
“Hopefully, we’ve now crossed the threshold of government understanding and buy-in on this issue.”
Includes reporting from Susanna Rust
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