Key takeaways from the sustainable trading third anniversary panel, hosted by Mizuho

 

Sustainable Trading marked its third anniversary with a panel discussion on the future of sustainable investment – where it’s heading, the challenges investors face and what’s needed to drive progress. Hosted by Mizuho, the panel featured insights from:

• Celia Price (Mizuho) – Expert in sustainable finance and ESG financing solutions
• Sam Segameglio (NinetyOne) – Sustainable equity investment specialist
• Sindhu Krishna (formerly Phoenix Group) – Institutional investor with expertise in sustainable strategy
• Arun Kelshiker (Invesco) – Leader in sustainable and impact investing
• Moderated by Chiara Ginty (BTIG)

The discussion covered the widening funding gap in sustainable finance, political uncertainty, evolving risk management strategies and the changing role of banks and asset managers in sustainability. The key message was clear: sustainable investment remains a long-term growth opportunity, and investors must take a forward-looking approach.

 

 

Here are the main takeaways.

1. A funding gap that’s holding back climate adaptation

There’s plenty of capital in sustainable investment – $30.5 trillion globally, or about 35% of all assets under management. Talking about climate investment strategies including climate mitigation, transition and adaptation strategies, the majority of investment is focused on climate mitigation and transition, while climate adaptation – helping people and businesses prepare for climate impacts – is being left behind.

• Only 20% of climate investment goes into adaptation strategies, despite the growing need.
• An estimated $200 billion per year is required between now and 2035 to support adaptation efforts, particularly in emerging markets, small island nations and least-developed countries.
• Adaptation projects tend to be smaller-scale, location-specific and harder to fit into traditional investment structures, making them less attractive to large institutional investors.

With climate risks becoming more immediate, the panel agreed that capital flows need to shift. Opportunities in water security, resilient infrastructure, and insurance solutions are emerging, but the scale of investment still isn’t where it needs to be.

2. Political uncertainty creates short-term noise but doesn’t change the big picture

Political shifts – especially in the U.S. presidential race – have triggered market jitters, with some investors pulling back from clean tech stocks over fears of policy reversals.

Yet history shows political rhetoric does not drive sector returns over the long run. During Trump’s first term, despite his anti-climate stance, US renewable energy deployment grew at record levels. Under Biden, even with the landmark Inflation Reduction Act – the largest climate investment in US history – traditional energy stocks was the best performing sector. This highlights how important it is to focus on the investment on the ground, rather than the noise.

Meanwhile, China has cemented itself as the global leader in clean technology production and deployment, with other emerging economies demand for clean technology rapidly increasing. This highlights that the transition will go on regardless of the US political administration.

There are real risks, particularly around tariffs and trade policies, which could cause higher interest rates and therefore raise the cost of capital heavy decarbonisation projects. But in the long run, demand for decarbonisation solutions continues to grow, and capital will follow the best opportunities for investor returns.

3. Investors need to step-up climate and transition risk management

Institutional investors – especially pension funds and insurers – are ramping up their approach to climate risk, recognising the financial threats posed by both the transition to a low-carbon economy and the increasing frequency of extreme weather events.

Their focus is on policy shifts, physical risks like wildfires and floods, and the challenge of tracking supply chain emissions. Social risks, including migration and food insecurity, are also gaining attention but remain difficult to quantify.

The big concern is that the transition won’t happen in an orderly way which would amplify both transition and physical risks. If policy changes are reactive rather than structured, entire sectors could experience dramatic shifts in asset values, while continued delays in action will intensify the physical consequences of climate change.

Yet many investors are still working with incomplete data. Only 4% of companies fully comply with climate risk disclosure guidelines, making it difficult to assess long-term exposure. Climate risks, particularly physical ones, are proving harder to model than expected, and social risks are even less defined.

With regulators pushing for greater transparency, investors need better data, clearer corporate disclosures and stronger analytical tools to make risk assessments more reliable and actionable. Without these improvements, climate-related risks will remain difficult to price, and even harder to manage.

4. Sustainable investing is maturing, it’s no longer just about excluding certain sectors

Sustainable investing has moved beyond simply screening out fossil fuels or controversial industries. Investors are now taking a more sophisticated approach that sees sustainability as a driver of long-term value creation.

ESG integration embeds sustainability factors directly into investment decisions. Impact investing goes a step further, directing capital toward projects and companies that create measurable environmental and social benefits, and provides a differentiated source of alpha generation.

One key takeaway from the panel was that the market generally misprices sustainable investment opportunities, meaning significant opportunities exist for investors who can identify their true long term value. Those with a strategic, long-term approach and a deep appreciation for sustainability will be best positioned to capitalise on these opportunities over time.

5. Sustainable investing is a global game and each region has a different role

Sustainable investment is playing out differently across regions, making a global perspective essential. In the US, political shifts create short-term volatility, but the renewable energy sector continues to grow regardless of administration changes. Meanwhile, China has taken the lead in renewable energy production and technology innovation, rapidly scaling up solar, wind and electric vehicle infrastructure.

Europe remains a regulatory driver, pushing for stricter sustainability disclosures and corporate accountability, which is shaping global ESG standards. At the same time, emerging markets face the greatest need for climate adaptation funding, yet capital flows remain low.

With China shaping clean energy supply chains, Europe enforcing tougher regulations and emerging markets adoption of clean technology growing exponentially, there are significant sustainability linked opportunities for investors that understand the global picture.

What needs to happen next?

The panel agreed that progress in sustainable investment depends on three things:

1. Stronger collaboration: Asset managers, institutional investors, banks and policymakers all need to work together to make sustainable finance more effective.

2. Better data and disclosure: Companies need to provide clearer, more standardised reporting on climate risks, transition plans and supply chain emissions.

3. Long-term thinking: Despite political cycles and short-term noise, the transition to a low-carbon economy is happening. Investors who take a strategic approach will be best positioned.

Final thoughts: Ignore the noise, focus on the big picture

Despite political uncertainty and data gaps, the fundamentals of sustainable investing remain strong. The need for climate resilience, decarbonisation and sustainable infrastructure isn’t going away – and capital will continue flowing to the best opportunities.

But investors must also recognise that transition and physical risks are becoming increasingly intertwined. The increasing likelihood of a disorderly transition makes proactive risk management more critical than ever. Those who fail to adjust their models and account for these uncertainties risk mispricing assets, underestimating physical risks and being caught off guard by market shifts.

For investors, success will come from cutting through short-term volatility, strengthening risk management frameworks and maintaining a global perspective.

The transition to a more sustainable economy is already in motion. The question isn’t if it will happen, but how fast – and who will be ready to seize the opportunities it brings.