Iran war strengthens case for renewables but investors also expect disorderly transition

Three-quarters of professional investors think the Middle East conflict will speed up the shift to clean energy, but fears are growing that action will be too little, too late

A survey of 300 professional investors by the Dutch asset manager Robeco found that 75% of institutional and wholesale investors across Europe, North America, Asia-Pacific and South Africa believe the conflict in the Middle East will accelerate the energy transition.

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A majority also expect physical climate risks to have a moderate to significant impact on their portfolios over the next five years, while 45% cite government policy as a key obstacle to greater climate investment.

Lucian Peppelenbos, a climate and biodiversity strategist at Robeco, said: “Our 2026 study illustrates what we call the new reality of climate investing. While investors remain committed to their net zero goals, there is a growing realism that the transition is driven by hard economics and hard geopolitics. The drive for energy security is benefiting investments in areas such as renewables, battery storage and grids. The new climate reality is also a realisation that physical risks are here now, not in a distant future. We believe this will increasingly drive investor sentiment in the next few years.”

But with the UN Environment Programme warning that global temperatures are on track to breach the 1.5C threshold set in the Paris agreement, investors are increasingly worried about the risk of a disorderly transition.

Fewer than 20% of respondents now expect an orderly transition. Nearly half warn that action could be too little, too late, and 44% think the goal of limiting global heating to well below 2C is unachievable.

The investment implications of a disorderly transition are notoriously hard to predict. A 2023 study by Patrycja Klusak, Matthew Agarwala, Matt Burke, Moritz Kraemer and Kamiar Mohaddes warned that almost 60 sovereign issuers could face climate-related credit rating downgrades as early as 2030 if temperatures exceeed a 2C scenario.

Yet for all the pessimism about how the transition will unfold, few investors are willing to abandon it altogether. Among respondents with a net zero goal, 94% say they will stay the course regardless of government policy.