Whispered truths: how climate capital allocators are revising their private markets playbook

Climate investment strategies are undergoing a fundamental reimagination of their raison d’etre.

By design and by consequence, private markets have been pushed into the climate investing limelight. In the UK for instance, steering patient capital into private markets has become a cornerstone of on-going pensions reform. The push is partly geared towards backing the energy transition.

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A new study highlights changing undertones of private markets-led climate investing. The Climate Capital Reset Project (CCRP), launched in June 2025, was aimed at uncovering ‘whispered truths’ of private markets climate investing.

The project has now published its findings. They carry not only insights but also implications for climate capital allocation.

Capital reset

The research – jointly led by Onramp Capital, MOTIV Partners and Great Circle Capital Advisors – was supported by Builders Vision, an endowment investor.

Researchers conducted confidential interviews with 150 respondents. Investor backgrounds differed widely from family office allocators and infrastructure funds to pension investors, endowments and foundations.

The project’s primary target audience was US-based family offices and findings are weighted towards North American private markets. Yet, the research has implications elsewhere.

A meta-finding sets the tone for the report early on. “Deploying the same climate capital strategies used from 2015-2025 will not work in the coming decade”, it asserts. CCRP interviews shed light on what the coming decade might look like. Some trends, the authors contend are obvious, others emerging.

Market structure

One such trend is private market concentration. Some 59% of private equity capital raised in 2025 came from 25 managers, according to the report. Within these funds too, AI investments account for a bulk of exposure. This, the authors reckon, matters for climate capital allocators.

“We flagged market concentration mostly as context for the rest of the paper and to tee up specific recommendations for climate capital allocators”, says Dan Firger, founder and manging partner at Great Circle Capital Advisors.

Firger, who worked on the report, says two implications stand out. One is risk driven. Climate-aligned positions in private markets, Firger views as a ‘genuine diversifier’ in an otherwise concentrated market segment.

The other, is opportunity. “AI-driven load growth is reshaping power markets and generating real climate-relevant investment surface area in firmed clean power, grid services, efficiency, and siting”, he explains.

Liquidity premium

Private market investment strategies are also being shaped by a palpable liquidity crunch. This is notably the case for growth stage climate technology assets – which often have long-duration, high-ticket capital requirements.

Meanwhile allocators are grappling with liquidity concerns. When the team conducted interviews with investors, several acknowledged portfolio reserve pressures against a challenging market backdrop.

“The current liquidity crunch may be one of the most important obstacles to solve for climate”, the report warns. Firger says liquidity crunches run the risk of climate capital flight, leaving commercial deployment of climate technologies mid-scale.

“Not every investor in the energy transition needs to be concerned with these dynamics. But for climate capital (capital deployed intentionally to enable and accelerate the transition, whether on commercial, concessionary, or philanthropic terms) solving the liquidity premium is central to whether the strategy works at all”, he notes.

Manager selection

As capital allocation plans take on new forms, so too does the process of appointing managers. Manager selection for private market climate investing, the report suggests, is more rigorous than ever before.

“The backlash to ESG investing has put a chill in the market. But some of it is more subtle. As we noted in the report, managers with short-term career goals are not being employed to take long-term risks or try new things, even when directed to do so”, Firger says.

“Committed allocators are getting more rigorous: closer scrutiny of actual deployment versus stated AUM, harder questions about portfolio company-level decarbonization progress, and a growing preference for managers with deep technical and sectoral expertise over generalist platforms that have bolted on a climate sleeve”, he adds.

Firger sees manager choices changing as a result. Smaller shops that stick to their climate guns are being preferred over the historical default of big brands.

CCRP’s whispered truths paint a picture of a revamped private market climate investing playbook. Despite the ESG backlash and partly because of it, capital allocation and manager selection are both undergoing their most seismic shift in decades.

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