The Climate
Capital Reset Project
A candid assessment of
the state of climate investing
The Climate Capital Reset Project report is a synthesis
of over 150 private interviews with leading allocators, investors, executives, donors and experts in the climate investing field.
At a critical inflection point for climate capital markets, this project surfaces actionable insights to inform the path forward for climate-focused allocators, philanthropic donors, investors and others.
The consensus is clear:
Deploying the same climate capital strategies we used between 2015-2025 will not suffice over the coming decade.
Read the report at climatecapitalreset.com
What We Heard
The landscape for climate investing is shifting in real time. Triangulating across diverse perspectives, we identified a set of emerging dynamics worth watching that can inform decisions by climate capital allocators and philanthropies.
Continuity efforts and syndicates High potential companies face binary funding risk. Continuity efforts need to laser focus on business models that can lead to self-sustaining commercial outcomes rather than extending bridges to nowhere. Real rigor imposed by LPs may be the best path to salvage and scale the most important technologies and business models for the transition.
Reinventing traditional fund models The traditional VC/PE model works for a small subset of climate solutions. New structures and vehicles need to be funded at scale that can rethink traditional assumptions about equity, debt, risk, duration, and IRR—or institutional managers will default to small “impact” allocations while parking the bulk of their capital, even if climate-committed, in conventional strategies.
Verticalization Vertical integration is an emerging theme both in companies and funding platforms. Full stack investment platforms that blend returns across company lifecycles could address climate’s “missing middle” and deliver tremendous long term returns. Platforms need to be large, but could solve capital gaps and duration challenges if done well.
Decoupling impact priorities The growth of impact investing by a wide range of market players has often created a commingling of priorities within funds and across strategies. Climate allocators and philanthropic investors alike should simplify and recast their impact criteria, freeing managers to prioritize real-world impact through portfolio performance rather than trying to solve for multiple objectives at once.
Political risk Antagonistic US federal action has introduced emerging-market-style political risk to domestic climate investments—permit revocations, approval delays, and idiosyncratic targeting can create binary win/lose outcomes for companies. Allocators need more sophisticated political risk diligence, and philanthropy should focus on state-level and sector-specific action that leverages pragmatic alliances over wishful thinking on policy and politics, at least in the near-term.
Repositioning around resilience Funds and companies alike are repositioning away from “net zero/decarbonization” toward “adaptation/resilience/infratech.” Concepts, however, remain loosely defined. Many funds are just relabeling. Real questions remain: What are the market drivers? How much are solutions worth? Allocators must discern superficial signaling from real plays.
Slow down may create scar tissue if misunderstood Project, company, and market failures due to the ripple effects of policy changes risk being misinterpreted as structural, sector-wide issues that will scare off conventional capital allocators for years to come. Philanthropy needs to urgently invest in communications efforts to define the narrative before misleading conclusions harden into conventional wisdom.
Messaging battles The climate agenda desperately needs new messages, new messengers and new platforms for action centered on innovation, competitiveness, security and quality of life, not traditional global policy framing derived from environmental advocacy.
AI will speed the climate transition… maybe The data center boom has become the single biggest driver of the energy transition. Despite politics, renewables are the best near term source of electrons. What today’s gold rush means for decarbonization and its durability is deeply uncertain.
No more bridges to nowhere Philanthropic capital is too scarce and too important to extend lifelines
to business models that will never reach commercial viability. Refocus concessionary capital on specific,
time-bound market failures with clear paths to commercial self-sufficiency.