Our climate innovation paper, commissioned by SAIL Investments¹, a sustainable private credit manager specialising in scaling climate and natural capital solutions across core global industries that need to transition most, sheds light on how investors are responding to the risks and opportunities presented by climate change.

We conducted 20 interviews, with 15 asset owners, one professional trustee, two investment consultants, one independent adviser and one asset manager, collectively managing over £400bn in assets. These discussions were designed to provide insights across four themes:

• Climate investment strategies.
• Risk and return.
• Asset management capabilities.
• Transition plans and implementation.

Data collection
We asked the interviewees 13 questions, aiming to gather insights into their appetite for investing in climate transition and innovation initiatives; responses to regulatory changes and environmental risks; barriers to executing sustainable strategies, including potential skills gaps to identify impactful opportunities and perceptions on risk and return performance; and the connection between climate and nature.

Best practice
The report presents five examples of best practice identified during the interviews. These showcase successful climate innovation investments from an impact and return perspective. The sample illustrates how effective climate innovation can be in practice.

1. Exposure – while most asset owners (60%) reported not having a formal allocation to climate-related investments, they maintain some degree of exposure to climate solutions through their broader portfolios.
2. Core opportunity – infrastructure development and renewable energy projects were identified as the primary areas of investment opportunity over the coming five years.
3. Fiduciary duty – the majority of interviewees (60%) view climate risk as a material long-term threat and believe addressing it is a critical component of their fiduciary responsibilities, going beyond traditional fiduciary duty.
4. Emerging markets – most of the asset owners interviewed (87%) already consider, or are expanding, their climate investments to embrace developing economies.
5. Political landscape – asset owners see political instability and environmental, social and governance (ESG) pushback, particularly in the US, as the major challenge over the next five years.

Note
1 SAIL Investments is a sustainable global private credit manager headquartered in the Netherlands. It provides non-sponsored, bespoke direct lending to large mid-market corporates operating in core global industries such as food & agri, land use, and other real-economy sectors where climate, nature and ecosystem services intersect. SAIL focuses on delivering highly scalable, 'beyond climate mitigation' and nature conservation-driven investment strategies designed to meet institutional asset owners’ portfolio fit and physical risk mitigation requirements.

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