Fewer investors now view the low-carbon transition as inevitable – 61% compared with 79% in 2022 – according to a new survey from investment manager Nuveen.
The survey also found that investors are adopting a more “pragmatic” view of the energy transition, with 73% of respondents agreeing that "near-term energy needs cannot be met without incorporating both traditional and renewable energy sources".
Despite this increased acceptance of fossil fuels, the commitment to clean energy “remains strong”, with most institutions prioritising clean energy and carbon reduction either as part of net zero goals or to capture compelling risk-return opportunities.
“We are seeing a shift toward strategies that combine the practicalities of current energy needs with the ambitions of a sustainable future,” said Harriet Steel, global head of institutional at Nuveen.
Overall, 44% of institutions have net zero commitments while another 25% plan to in the coming 12 months. Even among the roughly 30% who do not intend to set net zero commitments, the majority (64%) say they are still investing in clean energy strategies or reducing carbon in their portfolios.
Interim milestones are also gaining traction. More than half of institutions (51%) with net zero goals have set interim 2030 targets, while 37% have established 2025 benchmarks to guide short-term progress. The vast majority of investors with 2025 goals (95%) say they are on track or partially on track to meet those targets.
Insurers focus more on impact investing
Insurers are evolving their approach to responsible investing, placing greater emphasis on positive impact metrics and benchmarking to the United Nations’ Sustainable Development Goals, according to the survey.
Currently, 93% either incorporate or plan to incorporate environmental and social impact factors into their investment strategies—signaling a continuing evolution toward measurable, outcome-driven approaches. Over half (55%) report managing a separate sleeve in their portfolio for impact investments, compared with only 26% in Nuveen's 2023 survey.
“Insurers are demonstrating an increasingly confident and sophisticated approach to portfolio construction, balancing long-term private market exposure with a commitment to impact-driven investing,” said Steel. “Their focus is shifting to targeted opportunities in private credit, infrastructure, and sustainability-aligned investments.”
This evolving strategy highlights insurers' role as “forward-thinking” institutional investors, leveraging private markets and impact-driven approaches to navigate a shifting financial landscape.
Mismatch between nature risk awareness and nature investing
While 45% of institutions identify nature loss as a top five economic risk, only three in 10 are increasing their focus on nature-related themes within their portfolios. This “likely reflects” the fact that nature-related investing is still a “developing” area, with many allocators in the process of educating themselves and building their understanding, according to the researchers.
Among those prioritising nature-based investments, 79% are seeking strategies that go beyond sustainability to proactively mitigate environmental degradation. Sectors such as water and waste management, pollution reduction and recycling are emerging as key opportunities, offering a dual benefit of environmental risk mitigation and attractive return potential.
The survey covered 800 institutions globally spanning North America, Europe, Middle East and Africa, and Asia Pacific in October and November 2024. Respondents were decision-makers at corporate pensions, public/governmental pensions, insurance companies, endowments and foundations, superannuation funds, sovereign wealth funds, and central banks. Survey respondents represented organisations with assets of more than $10bn (55%) and less than $10bn (45%), with a minimum asset level of $500m.
