At a global level, project finance plays a pivotal role in enabling the development of energy infrastructure, particularly in regions where public capital is limited. This is especially true for large-scale, capital-intensive renewable energy initiatives in developing countries, where structured finance mechanisms are mobilizing private investment.

Investment banks, along with private credit and equity, remain key backers of fossil-fuel investment. But the longer-term trajectory points toward a growing preference for clean energy, driven by policy incentives and evolving investor priorities. Of the $3 trillion in global energy investment in 2024, about $2 trillion was allocated to clean energy technologies—including renewables, grids, storage, nuclear and low-emissions fuels—and just over $1 trillion to fossil fuels, including coal, oil, and gas, the IEA reports.

To put these numbers in perspective, the ratio of clean energy to fossil fuel investment has shifted from 2:1 in 2015 to 10:1 in 2024 for power generation specifically. According to the latest available data, solar photovoltaic (PV) investment alone is projected to total $500 billion for 2024, surpassing all other electricity generation technologies combined.

China leads the way in clean energy spending at $680 billion, followed by the EU ($370 billion) and the US ($300 billion). Singapore-based Oversea-Chinese Banking Corporation (OCBC) is among the major banks supporting clients in the energy infrastructure space, collaborating with Chinese sponsors and engineering, procurement, and construction (EPC) contractors to develop and construct renewable projects in Southeast Asia: across generation, transmission, distribution, and storage infrastructure.

“Having committed to achieving net-zero emissions by 2050 for six priority sectors, including the power and oil and gas sector,” OCBC’s project finance team tells Global Finance, “a key focus for the bank has been to actively engage our clients in these sectors to support their net-zero transition. These include supporting our clients’ efforts in increasing the energy efficiency of new and existing plants and in scaling renewable energy development and deployment and relevant infrastructure.”

For example, OCBC China extended a one-year green loan of ¥220 million (about $30 million) to China’s Jiangsu Financial Leasing Co. The loan is being used for renewable-energy power generation projects in regions including Hebei, Guangxi, and Jiangsu.

“Markets such as Chile and Colombia have emerged as standout opportunities.”

Hugo Assunção, CFO, Perfin Infra

Targeted at energy conservation and emission and pollution reduction, these projects are also expected to improve regional water quality and optimize energy infrastructure.

“The green loan empowers Jiangsu Financial Leasing to incorporate environmental considerations in their business activities, putting the company on track to meet its sustainability commitments,” the OCBC team says.

Outside China, OCBC is supporting energy projects in Australia, Southeast Asia, and North Asia as well as the UK and US. Commonalities include clear pathways to energy security, not just within the renewables space but also for liquid natural gas as a transitional fuel. The bank recently committed to financing two projects in the UK, including a large-scale commercially viable carbon capture storage facility and a gas-fired power plant with carbon capture. The OCBC team says, “Our involvement in financing long-distance transmission lines in the UK also favorably positions us to contribute to the development of an ASEAN power grid, which is currently being contemplated.”

While China has made progress through massive transmission infrastructure investment, curtailment risk—whereby renewable energy generation may be deliberately reduced or halted due to grid constraints, oversupply, or market inefficiencies—remains a concern in certain regions. This is especially the case in the wind-rich northern provinces, where transmission constraints have led to curtailment rates that sometimes exceed 20%.

Elsewhere, curtailment risk tends to be pronounced in regions of the world that are experiencing rapid renewable energy growth but lack sufficient transmission infrastructure.

Brazil is one such country. Fitch Ratings predicts that the volume of curtailed energy there could rise over the next few years due to the level of intermittent renewable generation in the country’s energy mix and the time needed to construct new transmission lines.

Brazil is working to address this. Total infrastructure investment in the country reached R$259 billion (about $46 billion) in 2024, a 15% increase from the previous year, with around 46% allocated to energy projects, according to the Associação Brasileira da Infraestrutura e Indústrias de Base.

“Brazil’s energy market has demonstrated consistent growth, underpinned by robust regulatory oversight,” says Hugo Assunção, CFO at São Paulo-based Perfin Infra. “However, it faces structural challenges, notably curtailment … to key demand centers in the southeast. To mitigate this, investments have increasingly focused on expanding transmission infrastructure.” Perfin Infra’s infrastructure assets under management in 2024 increased from R$9 billion to R$15 billion in 2024, driven primarily by strategic investments across the transmission, generation, highways, and sanitation sectors.

Across Latin America as a whole, capital deployment led by Brazilian investors has grown steadily, Assunção says, supported in part by favorable regulatory frameworks.

“Recently, markets such as Chile and Colombia have emerged as standout opportunities,” he adds, “particularly in renewable energy and sustainable infrastructure sectors.”

Despite a challenging macroeconomic environment, Assunção credits Brazil with solid momentum in capital markets appetite for well-designed infrastructure projects. “Brazil’s stable regulatory framework and the accelerating demand for clean energy have bolstered investor confidence,” he says.

Regulatory certainty remains a key factor in pushing renewables investment forward, along with policy support and streamlined permitting processes. These concerns have only gained prominence as the Trump administration’s recent actions demonstrate that regulatory uncertainty isn’t limited to emerging markets.

Policies impeding offshore wind and other renewable projects, which would have contributed substantial megawatt capacity to the system over the next decade, will create significant challenges for new-generation deployment across the US, says Marcia Hook, Energy Regulatory and Markets partner at Clifford Chance. Countries that maintain consistent investment in renewables without implementing obstructive regulations are most likely to gain competitive advantage, she argues.

“We don’t really see any other countries taking specific action against certain types of renewable projects,” says Hook.

Crucial for private-sector investors trying to gauge their risk appetite are regulatory frameworks that include lender protections and foreclosure rights guarantees, while private equity investors closely evaluate how regulations might impact their exit opportunities and asset valuations.

That means private capital is focusing on jurisdictions with transparent, predictable regulatory environments and technologies with the strongest regulatory support.

Private illiquid funds “are increasingly displacing traditional banks as the primary source of financing, engaging from the early stages of project development, including the construction phase,” notes Perfin’s Assunção.

Perfin expects the tilt toward private capital for financing green and sustainable energy projects to persist through the end of this year, as projects aligned with the energy transition and emerging technologies—such as green hydrogen and energy storage—continue to attract significant investor interest.

“These sectors have been drawing increasing capital inflows,” Assunção says, “driven by their strategic importance and the rising global demand for sustainable solutions.”

That figure is 27% above the 10-year average, according to a recent report by Gallagher Re, which estimates that natural perils – from wildfires in Los Angeles to flooding in Valencia to deadly landslides in Southeast Asia – created direct economic costs of $417 billion in 2024. Private and public insurance entities covered 37% of that total, with the US alone accounting for $117 billion in insurance losses.

Rather than hiking premiums or pulling out of high-risk markets completely, the industry aims to minimize future losses by working with reinsurers, brokers, and other industry experts while reaching out to local governments and environmental groups, climate and technology experts, and even international agencies.

“Pulling out of a market is not a decision that anyone is going to make lightly.”

Dale Porfilio, Insurance Information Institute

“No one country is going to solve this problem on its own,” says Maryam Golnaraghi, director of climate change and environment at The Geneva Association, a Zurich-based think-tank for the global insurance industry. “The solution is going to take all of society working at different levels and different stages to develop incentives and solutions.”

This month, the association is releasing a report based on nine months of collaborative effort between the industry, academic institutions, climate-risk modelling firms, mortgage and lending regulators, and international organizations. The document, which will lay out methods to safeguard access to home insurance amid the global surge in extreme weather risks, is focused on developed economies with mature insurance markets: Australia, Canada, the EU, Japan, the UK, and the US.

Financials at global insurers/reinsurers remain strong. Global reinsurer capital increased by $45 billion to $715 billion last year while reported equity rose by $38 billion to $600 billion, continuing a recovery that began in 2022, according to Aon, a global professional services firm.

“Higher retentions and tighter coverage again insulated reinsurers from the worst effects of the elevated natural catastrophe activity in 2024,” said Mike Van Slooten, head of market analysis for Aon’s reinsurance solutions in London, in a recent Aon report.

As part of the collaborative effort to keep the industry financially resilient, some industry stakeholders are zeroing in on climate risk solutions, says Peter Miller, president and CEO of The Institutes, a not-for-profit in Malvern, Pennsylvania, with expertise in risk management and insurance.

Global reinsurers, for example, are investing heavily in climate research and modelling capabilities to assist insurance brokers in developing specialized climate advisory services that help clients understand and mitigate their exposures. Industry associations are creating frameworks for climate risk disclosure and management while insurance technology firms are introducing data analytics and parametric products for climate perils. And ratings agencies continue to weave climate considerations into their assessment methodologies.

“The industry recognizes climate change as a systemic risk that requires significant adaptation,” says Miller. “Continuing business as usual would lead to market disruptions and coverage gaps. Industry leaders view climate change as a transformational force rather than just another risk factor. They’re investing in capabilities to understand, price, and manage climate risks while engaging with policyholders on adaptation measures.”

In the wake of a natural disaster, insurers are the “financial first responders,” says Dale Porfilio, chief insurance officer at the Insurance Information Institute (Triple-I), an insurance trade association. “We are here for that risk transfer and to make people whole.” Yet, the greater frequency and severity of natural disasters—from floods to hurricanes to wildfires—along with increased repair and rebuilding costs is spurring insurers in the US to collectively reassess their risk appetite for residential property.

“Can we continue to insure every single house in the way that we once did, based on the cost and the relative risk?” says Porfilio. As a risk-based product, policyholder premiums must reflect what losses are expected to be in the upcoming year. “Pulling out of a market is not a decision that anyone is going to make lightly.”

State insurance commissioners in the US, who can be elected officials, direct greater scrutiny to the pricing of residential property, he adds. Homes located along coastlines and waterways and in hills and canyons frequently carry greater exposure to natural disaster risks than commercial properties, which tend to be located inland and closer to central transportation areas.

Risk managers and insurance brokers are reaching out directly to these corporate clients with new products and expertise to help them understand climate adaptation and manage their risks.

“We help organizations become resilient to extreme weather, now and for the future, by leveraging our suite of climate adaptation capabilities,” says Nick Faull, London-based head of climate and sustainability risk at Marsh, a global insurance broker and risk management advisor. Marsh counsels executives to consider extreme weather events on two levels: assets and systems.

“How will assets, including buildings, people, and operations as well as emergency response processes, be impacted?” Faull says. Secondly, managers must determine how extreme weather events will impact the broader organization: “particularly through the impacts on suppliers but also on critical infrastructure, resources and ecosystem services, customers, and on the communities in which it operates. In addition, what impact will be changing regulations and capital provider expectations have?”

By comprehensively monitoring their supply chains—Marsh’s parent, Marsh McLennan, offers an AI-powered tool called Sentrisk—companies can better prepare for extreme weather events. As an example, Faull cites a UK company that learned a supplier, deep in its supply chain in Southeast Asia, was at high risk of flooding, leaving the company exposed to significant disruption.

“With better information, the company is able to build resilience into its supply chain to avoid future disruption,” he says.

In collaboration with Floodbase, a parametric flood expert, and Swiss Re Corporation Solutions, Aon launched a parametric insurance solution in February that promises to address and mitigate losses from hurricane-related storm surges along the US coast using a range of meteorological data sources. Rather than aligning pay-outs to traditionally adjusted physical damage, like an indemnity insurance product, Aon bases them on water height. Policyholders can select the level of pay-out they require for a certain level of storm surge, with a rate calculated accordingly. The proceeds can be used for any financial loss associated with the event, addressing a substantially broader set of exposures than traditional insurance.

Hurricane Helene was the single most devastating natural catastrophe of 2024, according to Aon’s 2025 Climate and Catastrophe Insight report, responsible for approximately $75 billion in economic losses, mainly due to US inland and coastal flooding. A parametric solution helps bolster existing levels of cover and provides liquidity, says Cole Mayer, head of parametric solutions at Aon. Used as a standalone product or with traditional and non-traditional insurance policies, it offers corporates more comprehensive protection, he says, noting that for some hurricane events, storm surge damage can account for more than one-third of the total loss cost. The industry is also turning to conservation groups and governments as key collaborative partners.

In Canada, Nature Force, which includes 15 insurers and Ducks Unlimited Canada, has invested in wetland restoration to reduce flood risk in urban communities, says Golnaraghi. Local and state governments can focus on risk-based land zoning, enforce updated building codes, and promote fortified building certification. Federal and national governments, in turn, can lay down standards of resilience that local and state officials must meet in their post-disaster aid programs and place a priority on constructing large-scale resilient infrastructure.

“Governments at all levels are crucial in scaling local resilience and collaborating with the insurance industry,” Golnaraghi says. “Together, they can develop a shared vision for hazard-prone areas where insurance challenges are rising due to an increase in unmitigated risks linked to growing exposure and vulnerability.”

Marcia Hook: Under the Biden administration, we saw significant investments in the US energy space. The business was booming, there was a lot of excitement from a range of investors, and that was bolstered significantly by the incentives under the IRA [Inflation Reduction Act of 2022] and a number of other favorable economic factors.

Now we are in a place where what will happen with the IRA is unclear, which is undoubtedly one of the major drivers of the boom we saw over the last two years. A lot of people are waiting for the uncertainty to die down; because at the end of the day, the energy industry is one that thrives on certainty.

Investors make investment decisions on the timescale of decades, not years. And these investments are sometimes in the billions of dollars. Right now, we see a lot of folks—both investors in the US and investors abroad—essentially holding and waiting until they have a little bit more certainty on what will happen with the IRA in particular.

From a practical perspective, even if the administration were to try and do that, renewables may be the most realistic way to meet that demand in the needed time frame.

There’s a lot of excitement about, for example, SMRs [small modular reactors] and other types of nuclear units coming back online, potentially. But the permitting timeline and the deployment timeline for that is more like the end of this decade at best. So realistically, renewables are still the best answer. Solar is the fastest to deploy. People in the renewable space are still very bullish.

To be clear, there probably does have to be an all-of-the-above approach. We will need more gas-fired facilities as well. I’m not saying that those projects are not part of the solution; but certainly, even if the administration were to strip away all of the renewables credits, I don’t know that we’d see all of these projects just evaporate. There’s still the need, and they’re still the fastest solution.

Reeves-Sobers: It’s going to be a toolbox of solutions. It’s not going to be one-size-fits-all. In the meantime, I think the operators are taking it upon themselves to come up with other creative solutions to that problem.

GF: Other countries are not moving away from renewables and environmentally responsible projects. Is that likely to change?

Hook: Outside the US, we generally see a trend to continue pursuing renewable energy resources. That being said, I think that there are some practical constraints globally to meeting all of the new power needs through renewable energy. So, much like in the US, I think that there are some practical considerations that might drive countries to consider gas and even coal, in some cases, as part of the all-of-the-above strategy to get enough power in the time frame that’s needed. While we haven’t seen anyone specifically turn away from renewables, I suspect that it’s possible we’ll see an uptick in nonrenewable sources, just because of the practical need to provide so much power.

GF: Are we seeing an increase in interest in the nuclear industry?

Hook: There’s certainly an increased interest in nuclear power, both on the side of the administration and in the private sector; and we are seeing facilities that are discussing recommissioning or essentially coming out of retirement. The best known is the Microsoft-Three Mile Island deal, where Three Mile Island [a power plant near Middletown, Pennsylvania, that in 1979 was the scene of the worst commercial nuclear accident in the US] will be brought back online to serve the Microsoft [energy] load.

There’s a lot of excitement in the nuclear community right now. People are very bullish on it. There’s a lot of attention to SMRs as well. It will take some time to deploy nuclear; and as we heard reported about the Microsoft-TMI deal, it is a pricey resource to contract with. But these facilities run continuously for very long stretches of time without needing any maintenance, so it’s quite attractive.

GF: There is a lot of chit-chat about how law firms are using big data analysis and AI to make some of their corporate practices more efficient. What is your experience?

Reeves-Sobers: At least from an environmental perspective, the more information, the better, because it clears up some of the unknowns that come with environmental liability. And that’s always better when you’re thinking about an investment and whether you want to pull the trigger on any particular project.

Hook: More information is better; more data is better. I would point to two discrete impacts. One is being able to find potentially material issues for valuation purposes much more easily. And then, two, just the efficiency in doing so.

GF: How does the current climate affect M&A and consolidations, not just in the energy sector but in others? Do you see a freeze?

Hook: It’s an interesting time because there’s certainly still M&A activity going on. The expectation is that M&A activity will increase, because there will be market participants looking to exit various investments or projects that they were developing. The sense that I’ve gotten from speaking to folks in the industry is the expectation that it will be a buyer’s market, whereas maybe three years ago it was more of a seller’s market.

We do expect to see an uptick in M&A activity. I’m not quite sure what the timescale for that is, because we’re still seeing it. I don’t know that there’s been a significant uptick yet, but that is certainly the expectation.

Japan’s commitment to ESG principles remains steadfast, even as major economies diverge in their approaches. While the United States grapples with an ESG backlash marked by legal challenges and political resistance, Japan is doubling down on its green initiatives, notably through the issuance of Green Transformation (GX) bonds.

Japan has emerged as a leader in climate transition finance, becoming the first country to issue sovereign transition bonds in February 2024. These five-year Climate Transition JGBs raised 100 billion yen (about $680 million), with subsequent auctions planned for 2025, underscoring the government’s dedication to funding decarbonization projects. The Ministry of Finance highlighted that these bonds align with the Paris Agreement’s goals and are designed to support industries in hard-to-abate sectors.

“Japan is taking an evidence-based approach to ESG, focusing on science-based targets and transparency,” said Hiroshi Tanaka, an ESG analyst in Tokyo. “The GX bonds are a clear signal of our commitment to sustainable growth.”

While Japan accelerates its ESG efforts, the United States faces growing skepticism. Over the past few years, conservative lawmakers and political figures have pushed back against ESG investing, arguing that it puts social or political goals ahead of financial performance. States like Texas and Florida have enacted legislation to restrict the use of ESG criteria in state-managed investments. Lawsuits targeting ESG-related disclosures and investment practices have surged, fueled by concerns over fiduciary duty and political polarization. A recent report from Harvard Law School noted that litigation risks have become a significant deterrent for US companies pursuing ESG strategies.

“In the US, ESG has become a political football,” said Sarah Miller, a corporate governance expert. “The backlash reflects deeper ideological divides and fears of overregulation.”

In contrast, Japanese policymakers view ESG as a long-term economic imperative rather than a partisan issue. “For Japan, ESG is not just about compliance; it’s about creating value for future generations,” Tanaka said.

Japan’s approach aligns closely with that of the European Union, where ESG remains central to regulatory frameworks like the Corporate Sustainability Reporting Directive (CSRD). Both regions emphasize transparency and accountability in climate-related disclosures. However, the US has seen efforts to roll back ESG initiatives at both state and federal levels.

A recent Forbes article highlighted this divergence: “While Europe and Japan are embedding ESG into their economic systems, the US is witnessing a retrenchment driven by political opposition and legal challenges.”

Despite global headwinds, Japan appears undeterred in its ESG journey. The government plans to expand GX bond issuance and encourage private-sector participation in sustainable finance. Experts believe this proactive stance will position Japan as a global leader in climate transition efforts.

“Japan’s strategy is pragmatic yet ambitious,” said Tanaka. “It recognizes that achieving net-zero emissions requires both public and private investment.”

As the world navigates complex ESG dynamics, Japan’s commitment offers a stark contrast to the turbulence elsewhere, especially in the US. Whether this divergence will widen or converge remains an open question.

Major global banks and financial institutions are increasing their participation in the social bond market, strengthening the role of debt capital in addressing social challenges across the world.

Standard Chartered recently announced the issuance of its first $1.1 billion social bond. The proceeds are primarily earmarked to facilitate lending to small and medium-sized enterprises (SMEs), including support for women-owned businesses. Funds will also be allocated to healthcare, education, infrastructure development, and food security initiatives.

The transaction aligns with the bank’s Sustainability Bond Framework, which applies environmental and social standards across sensitive sectors. For instance, financial services are extended only to clients committed to reducing thermal coal dependence to below 5% of revenue by 2030.

In 2024, Deutsche Bank issued its first social bond, raising €500 million to expand its sustainable asset pool. The proceeds will finance affordable housing and essential services for elderly populations.

In January, the International Finance Corporation, part of the World Bank Group, raised $2 billion through its largest-ever social bond. The funds are aimed at supporting low-income communities across emerging markets.

Social bonds are structured similarly to conventional fixed-income instruments in terms of risk and return. The key distinction lies in the requirement for legal documentation specifying how proceeds will be allocated, ensuring transparency and accountability.

“The increase in the issuance of social bonds is aligned with the societal goals of both public and private entities,” says Conor Moore, Global Head of KPMG Private Enterprise. “While there are ebbs and flows in the political environment around sustainability initiatives, it will remain a priority for many institutions. This should result in further issuances across various regions and sectors.”

Mike Hayes, KPMG’s Global Climate Change and Decarbonization Leader, adds: “It should be noted that while the bulk of global investment will be directed toward sustainable energy and infrastructure, many of these projects involve a critical social dimension—referred to as the Just Transition.”

“In other words, unless social issues such as community and employee buy-in are addressed, projects are unlikely to move forward. This is one important role that social bonds can play in supporting infrastructure investment.”

According to the UN’s Financing for Sustainable Development Report 2024, the global financing gap for sustainable development remains vast—estimated at $4 trillion annually. While social bonds can help bridge part of this shortfall, they are unlikely to close it entirely.

Will there be enough money in the world to save the planet? The answer to this urgent question is not straightforward.

Big-picture prognosticators name staggering sums needed to finance a greener future—and equally daunting shortfalls in securing them. Investment in the energy transition must more than double to $4.5 trillion annually to reach internationally agreed 2030 emissions targets, according to European financier Allianz. The US-based Boston Consulting Group (BCG) estimates an $18 trillion net-zero “capital gap,” in a late 2023 report.

The outlook for 2025 appears even more challenging. US President Donald Trump has reclaimed the office, vowing to dismantle the generous green subsidies his predecessor, former President Joe Biden, had advanced through the Inflation Reduction Act (IRA)—and to “drill, baby, drill” for oil and gas. High energy costs and farmer protests are eroding support for Europe’s ambitious transition agenda, while Canada is poised to roll back its precedent-setting carbon tax.

In financial markets, stubbornly high interest rates are keeping the cost of capital-intensive energy infrastructure elevated for longer. Meanwhile, a surge in data center construction, driven by AI, is supercharging electricity-demand projections—prompting a return to fossil fuel dependency. “One of these data centers can take as much power as a small city,” says Richard de los Reyes, a portfolio manager at T. Rowe Price’s New Era Fund. “There’s an increasing recognition that a lot of that will have to come from natural gas.”

The view is quite different, though, in the financial trenches, among practitioners who are raising capital and structuring deals. They worry about too much capital chasing too few green investments. “I’m still a true believer that the megatrends of decarbonization and digitalization will transform the way we live,” says Alex Leung, head of infrastructure research and strategy at UBS Asset Management. “But [these sectors] are getting to be crowded trades.”

How can both be true? The renewable energy universe is increasingly divided from a financial perspective. There is no shortage of capital, but much of it is concentrated in a few mature green technologies, while more-innovative or unproven sectors struggle to attract funding.

On one side are established, cost-effective technologies that investors can back with a reasonable expectation of a steady, decades-long payout. Solar and onshore wind power have moved into this category, as economies of scale and an equipment boom in China have driven the costs of these energy sources below fossil fuels.

On the other side are technologies that show promise but not yet profit, such as carbon capture or green hydrogen; or those with uncertain risks and high costs, like offshore wind. These projects still rely on deep-pocketed corporate backers or government support to reach commercial viability.

“Everyone wants to be part of the energy transition on paper,” says Antoine Saint Olive, global head of infrastructure and energy finance at Natixis Corporate and Investment Banking in Paris. “But when you have a real deal on your desk, in many cases you are talking about new technologies.”

This mismatch—between an abundance of capital for well-established projects and an undersupply for higher-risk innovations—helps explain why trillions are still needed, even as investors complain of crowded trades.

Perhaps the most critical deals are in a border zone between proven and new technologies: in fast-developing storage systems for solar and wind power, and in adjustments to grids needed to transmit it. Renewable-generation investments will eventually hit a wall without upgraded delivery to the customer, and in some places they may have already.

As a rule of thumb, existing grids can cope until renewables reach 15% of their input, says Rebecca Fitz, a BCG partner and founding member of the firm’s Center for Energy Impact. Some parts of Europe are above 50%, creating “a bottleneck in power market design,” she says.

Europe’s patchwork of national grids and regulators poses special challenges to moving green energy from where it’s best produced—Spain and Portugal for solar, the Netherlands for wind—to where it’s needed, adds Stef Beusmans, an associate partner at Sustainable Capital Group in Amsterdam. “Different national support schemes make it harder for Europe to really fast-track deployment of clean energy,” he says.

The enormous scope and complexity of the energy transition present both challenges and opportunities to the venerable, low-profile world of infrastructure finance, which absorbs about 4% of global capital, according to UBS. Plain vanilla deals are rare in this area. Bond underwriters and traders have rating agencies to guide them and liquid markets to distribute risk, but infrastructure investors must structure transactions individually and often hold the risk for the long haul. “Structuring and closing a deal could take up to a year,” Leung says. “Many infrastructure assets require active management after that. This isn’t just clipping a coupon.”

Green investments make the game only harder, says Marta Perez, head of the Americas infrastructure debt team at Allianz Capital Partners. “Traditional project finance models, which were designed around more-predictable long-term assets like fossil fuel power plants, need to evolve for the variable, often decentralized nature of renewable energy systems,” she explains.

One threat that infrastructure pros view as possibly overrated is Trump. The sheer duration of energy investments—far exceeding a single presidential term—makes policy swings less impactful. UBS research predicts that Trump will also struggle to repeal or gut the IRA. Roughly 70% of US renewable projects under development are in “red” states, which voted for Trump, Leung and his colleagues note. Eighteen Republicans in the House of Representatives already signed a letter opposing repeal, more than enough to be decisive in the narrowly divided chamber. But the impact of this resistance is hard to accurately measure, as Trump has been routinely bypassing Congress.

Texas, firmly in the Republican camp politically, nonetheless leads the US in wind and solar power. Nationwide, more than 70% of Americans support more wind and solar energy, according to Pew Research. UBS’ base-case scenario is that Trump will tweak the IRA rather than dismantle it, allowing Republican-led states to complete near-term renewable projects while still giving the president a political victory.

The US, the world’s biggest economy, is not the leader in green investment. That distinction belongs to China, which last year sunk $818 billion into clean energy—more than the US, EU, and United Kingdom combined—according to CarbonCredits.com. Solar capacity in the People’s Republic jumped by 45.2% in 2024. China is also miles ahead in plans for nuclear power, which could be making a comeback in the US, too, if not Europe. Nuclear power emits no carbon, though it brings other well-known risks.

China’s leap forward in renewables is largely financed domestically, so global private capital looks elsewhere. Europe remains committed to a renewables surge to partly replace Russian natural gas imports, which Russian President Vladimir Putin cut off in response to Ukraine-related sanctions. The EU is also betting on more liquefied natural gas, but is still investing 10 times as much in renewables as in fossil fuels, the European Investment Bank (EIB) reports. The bloc’s total energy-transition investment jumped by one-third in 2023 to $360 billion and is expected to keep rising to meet 2030 carbon-reduction targets.

Other nations are also stepping up. India’s renewable capacity surged to nearly half the US level last year, with plans to triple by 2030. Six major solar developers in India have “successfully attracted investments from diverse sources, including foreign institutional investors from North America, Europe, and the Middle East,” S&P Global reports.

Brazil added a record 10.9 GW of power capacity last year, nearly 85% of it from renewables. Saudi Arabia is supporting the world’s largest and most ambitious green hydrogen project, near Neom, the kingdom’s “city of the future,” with $8.4 billion in promised investment, according to Neom. The goal is to split water molecules into their oxygen and hydrogen components using electric current produced from renewable sources, then store the hydrogen as a fuel source. Hot on their heels is the Saudis’ neighbor, the United Arab Emirates, leveraging its abundant sunshine for large-scale renewables projects.

Capital for renewable energy is not drying up either. As populations age across the developed world and pension assets grow, managers look harder for investments that can match their long-term liabilities, Leung says. Funds in Australia and Canada, whose pension pools punch above their macroeconomic weight, are shifting up to 20% of their portfolios into infrastructure, he adds.

Environmental, social, and governance (ESG) principles continue to motivate big-ticket investors globally, Natixis’ Saint Olive points out. Banks, which provide at least as much infrastructure funding as institutional investors, still want to “greenify their balance sheets.” At least, banks outside the US do. “Banks and sponsors in the rest of the world still have ESG ambitions,” Saint Olive says. “That’s not going to collapse because there is a new president in one country.”

Private equity investments in green energy are also growing, from next to nothing before the pandemic to $26 billion globally by 2023, according to the EIB. Given the private equity model of leveraging up equity holdings, the money at work could be several times that figure.

Private equity players in the US are particularly focused on onshore wind generation, as solar becomes trendier and Texas officials push legislation that advantages fossil fuels, says BCG’s Fitz. “Private equity is paying a premium for wind assets,” she explains. “They view wind as a critical part of the energy picture going forward.”

Funding the global energy transition remains a monumental challenge. The US interstate highway system—one of the great infrastructure projects of the 20th century—cost $129 billion ($389 billion adjusted for inflation) when completed in 1991, according to the US Department of Transportation. That is a small slice of just one year’s capital needs for green power. The US highway system used proven technology and relied on the federal budget.

“Renewables require not just infrastructure, but also a complete rethinking of how energy is produced, stored, and distributed,” as Allianz’s Perez puts it. Governments, strained by 21st century social commitments, want to offload as much cost as possible to the private sector, China partially excepted.

Most renewable-transition estimates exclude the enormous investment required in mining the metals that will build batteries, grids, and turbines, Saint Olive notes. Mining is a “fully merchant business” too dependent on fluctuating prices to offer fixed, infrastructure-style returns; and it earns investors no green points for regulatory or public relations purposes, he adds. “Many banks don’t see the mining business positively from an ESG perspective,” he says. “They would rather let others finance it.”

All the same, the global energy transition is not only continuing but accelerating, whatever the rhetoric coming from the White House. Infrastructure investors need to be part of the “complete rethinking” of a lower-carbon future. “The good-ol’ fully contracted project is getting harder to find,” Saint Olive observes.

But infrastructure investors are also used to designing bespoke solutions for a changing project landscape. “The beautiful part of our profession is that for the same asset you can have 20 different finance structures,” Saint Olive says. “In the US, you may have bank loans for construction, then turn to capital markets. European plants could rely on a 10-year power-purchase agreement. In the Middle East, you can get very long-term financing: construction plus 25 years.”

The critical question isn’t whether the transition will happen—but whether it will happen fast enough to avert ecological catastrophe. Private finance looks set to do its part, if engineers and governments can combine to deliver viable investments. “If projects are generating 20% returns, more capital will come in,” UBS’ Leung states. “Economic viability is a big part of the equation, but not always part of the discussion.”

For sustainable finance, 2024 was the best of times and the worst of times.

On the positive side, issuance of impact bonds, sometimes called “GSS+” bonds (green, social, sustainability, and sustainability-linked instruments) totaled $1.1 trillion, according to provisional data published by the Climate Bond Initiative (CBI) in January.

However, on the red side of the ledger, the global coalition to contain climate change seemed to be fracturing by the end of the year. The 2024 US presidential elections brought to power the new Donald Trump administration; and Trump immediately ordered US withdrawal from the Paris Agreement, the world’s main treaty to fight climate change.

Given the need to more than double spending on clean energy supply, storage, and grid infrastructure to $300 billion/year for developing countries and $1.3 trillion/year for developed countries by 2035 “to keep the 1.5 target alive” (to achieve the goal of limiting global warming to an increase of no more than 1.5°C), “2024 failed to live up to what is needed,” says Gregor Vulturius, lead scientist and senior adviser on climate and sustainable finance at SEB.

Many market observers, however, still see the glass half full—especially looking beyond North America. “The outlook for 2025 is growth in sustainable finance,” says Timothy Rahill, a credit strategist at ING (Netherlands). “We ended 2024 with an increase over 2023. Of course, in 2021 and 2022, the levels of sustainable-finance issuance were very high, and outliers in the initial rush to do green issuance.”

According to CBI’s preliminary numbers, green bonds dominated in 2024, accounting for approximately 61% of the $1.1 trillion GSS+ debt accrued that year, compared with social and sustainability bonds (34%) and sustainability-linked bonds (1%).

Rahill explains that the EU’s Green Bond Standard (GBS), which took effect in December, should eventually push green bonds further. The standard aims to boost investor confidence by setting “a clear gold standard for green bonds” in the EU.

Still, “Many other issuers, such as sovereigns, view the rigorous new requirements [of the GBS] as a significant hurdle,” according to a late-January blog post by global investment firm Franklin Templeton. “They will likely adopt a wait-and-see approach to understand all potential implications before committing to issuing a [European green bond].”

According to Moody’s Ratings, overall bond issuance soared 35% in 2024, while sustainable bonds remained flat; and the latter’s share of the overall bond market fell from 15% in 2023 and 2022 to 11% in 2024.

However, Rahill predicts that in 2025, “Issuers will return their focus to green/sustainable finance issuance.” Moody’s mostly agrees, anticipating new green bond volumes rising to about $620 billion, 2% more than in 2024, “but eclipsing the previous record of $617 billion in 2021.”

Globally, “Social bonds will be constrained by a lack of benchmark-sized projects, while transition-labeled bonds and sustainability-linked bonds (SLBs) will remain niche segments as they navigate evolving market sentiment,” the ratings agency posted on its website.

For sustainable bonds, “Market conditions will remain the same as 2024,” says SEB’s Vulturius, who predicts growth of around 10%. According to SEB’s data, 2024 saw approximately $1.2 trillion in new sustainable bonds versus roughly $1.1 trillion in 2021, the previous record year, though SEB’s numbers, like CBI’s, are still preliminary.

What about the new administration in Washington, D.C.?

“I don’t expect the sustainable finance market will see a major headwind with the Trump administration. I still think we will see growth in 2025, even in US dollar debt,” says Rahill, though some corporations may not commit until the second quarter.

The CBI identified several factors that will encourage issuance in 2025, including new taxonomic definitions and increased spending by governments, development banks, and corporations on efforts at climate change impact adaptation and resilience. The CBI also expects increased visibility from insurance companies regarding sustainable finance in 2025.

Institutions focusing on sustainable finance in its various forms will have plenty to keep them busy in 2025. With that in mind, Global Finance presents its fifth annual Sustainable Finance Awards, with winners from seven regions and 53 countries, territories, and districts; and global honorees in 14 categories.

Global and regional awards require submissions detailing hard metrics of ESG activity, such as year-over-year growth in sustainable finance transactions or sustainable financial instruments as a percentage of total portfolio. Softer metrics also required include goal alignment with leading ESG norms or innovative product development. Entries were not required for country awards, which were judged by the editorial team’s independent research. Evaluation criteria includes governance policies and goals, environmental and social sustainability financing achievements, industry leadership, and third-party assessments. This awards program covers activities from January 2024 to December 2024. There was no fee to enter.

DBS is striving to green Asia’s economy by acting as an environmental-transition catalyst for anchor companies, mid-caps, and small and midsize enterprises (SMEs). The bank provides transition-related financing for these organizations at the corporate, project, and asset level. Among these offerings are green, sustainability-linked, and social loans and bonds, along with carbon-market financing and other products.

Standout transactions in 2024 include a loan to LG Energy to construct a plant in Poland for the manufacture of batteries used in electric vehicles. A 3 billion Hong Kong dollar (about $385.7 million) loan to the Hong Kong Housing Society will help create affordable residential projects. A 300 million Singapore dollar (about $224.2 million) bond will help the Singaporean developer CapitaLand build projects in alignment with green finance frameworks. In addition, the bank develops analytical tools to track and analyze climate data. It engages with industries (notably in the power, automotive, steel, shipping, real estate, and automotive sectors) and policy makers to chart paths to a healthier environment.       —Laura Spinale

Seeking to help Taiwan transition to a greener economy, CTBC Bank is working with Ørsted, the world’s largest developer of offshore wind-power projects, for the construction of the 61.3 billion Taiwan dollar (about $1.9 billion) Project Trinity.

This project consists of two offshore wind farms with turbines designed to withstand typhoons, seismic activity, and other ecological vagaries. Slated to be operational by the end of 2026, the farms—named Greater Changhua 2b and Greater Changhua 4—will generate 337 MW and 583 MW of electricity, respectively. This is enough to power roughly a million Taiwanese households.

CTBC Bank acted as mandated lead arranger and bookrunner for this syndicated loan. In that capacity, it identified and recruited potential lenders and other partners. These include Cathay Life Insurance, Taiwan’s largest insurance company. Project Trinity marked Cathay’s debut investment in Taiwan’s offshore wind market. CTBC Bank also recruited Taiwan’s National Credit Guarantee Administration to act as local export credit agency for the loan package.       —LS

Brazilian-headquartered BTG Pactual has been actively expanding its sustainable funding and transactions that have environmental and social benefits. This includes developing and managing new funds with strong sustainability and impact guidelines for financial products available in local markets.

BTG Pactual raised 542 million Brazilian reais (about $95.3 million) in its impact investing fund, which achieves social and environmental benefits with strong financial returns. The fund invests in small and midsize enterprises through private equity, focusing on educational technology for low-income populations, agribusiness software, alternatives to plastic packaging, and sustainable practices within the Brazilian açaí palm chain.

The bank has also focused on reforestation efforts through its Timberland Investment Group (TIG) subsidiary, which launched in 2021 and has raised $500 million toward its $1 billion target. The group wants to restore about 133,000 hectares (about 328,650 acres) of natural forest and establish sustainable commercial tree farms on an additional 133,000 hectares. As of the first quarter of 2024, TIG had $6.9 billion in assets and commitments and nearly 3 million acres under management throughout the US and Latin America.         —Andrea Murad

China Central Depository & Clearing Co. (CCDC) is a state-funded financial institution responsible for the custody, registration, and settlement of fixed-income securities in China. It functions as an important operations platform for the bond market, a supporting platform for the implementation of macroeconomic policies, a benchmark-services platform, and a key gateway for the opening up of China’s bond market. For example, CCDC provides issuance, registration, depository, settlement, valuation, collateral management, and information-disclosure services for green bonds, social responsibility bonds, and other sustainable finance products.

Its services can help issuers improve information-disclosure transparency and assist investors in identifying sustainable financial products. CCDC also promotes sustainable investment philosophy and otherwise contributes to the development of sustainable finance in China. As part of this work, it develops sustainable development-related indices, including China’s first green bond index, and has developed new standards for ESG evaluation.

—LS

The circular economy is about reusing, repairing, and recycling products and materials instead of simply disposing of them. Pulp and paper technologies provider Valmet has embraced circular economic principles in a big way. It’s now upgrading and extending the lifetime of its machines. The company has learned that modular machine design and smart engineering can often enable the same equipment’s use for other purposes. Valmet is also maximizing the use of recycled metals, reusing metals in its foundries.

Finland’s Nordea was the sole sustainability structuring adviser in Valmet’s March 2024 €200 million (about $206 million) green bond offering, making it easier for Valmet’s customers to manufacture sustainable products from renewable resources in the high-emissions pulp and paper industry. All eligible expenditures from the financing are aligned with the EU Taxonomy Regulation section 5.1 under transition to a circular economy.

—Andrew Singer

Raiffeisen Bank International (RBI) has long been considered a pioneer in green bond issuance in its native Austria. In 2018, it rolled out its green bond program aimed at encouraging sustainable lending across the RBI network of 11 Central and Eastern European (CEE) markets. Along with other banks, it participated last June as bookkeeper for Czech power company CEZ’s second green and sustainability-linked bond issue, worth €750 million ($772 million). The 4.25% bonds are due in 2032 and will be listed on the main market of the Luxembourg Stock Exchange. “With a total outstanding volume of [€2 billion] across 21 bonds in five currencies in Austria as of December 2023, RBI is the largest green bond issuer among financial institutions in the country and a regular issuer of green bonds on the international capital markets and in the retail segment in Austria and CEE,” proclaims the bank in its Green Bond Allocation and Impact Report 2024.

RBI has also developed a Sustainability Bond Framework to facilitate the issue of sustainable bonds. The bank works closely with clients in countries across the region to determine their needs and long-term environmental goals and tailor any forthcoming environmental, social, and governance (ESG) loans accordingly. In total, ESG loans to corporates over 2024 grew some 14% to €8 billion after a 16% increase in 2023 to €7 billion.    —Justin Keay

Akbank issued its first social bonds in 2022, and they have since proven to be suitable for its general bond issuance strategy. The bank issued some 770 million Turkish lira ($21.4 million) in domestic social bonds from 2022 to the end of 2023. The bonds incorporate three main pillars—environmental, technological, and social—that are aligned with Akbank’s Sustainable Finance Framework. The social pillar focuses on financing products and services to improve the health and well-being of communities in underdeveloped regions, facilitate equal opportunity, and generate employment, particularly among less-represented groups.

The bank has complemented its program of social bond issuance with a program of social loans. In 2023, in the wake of the devastating Feb. 6 earthquake that hit Turkey, Akbank announced the country’s first syndicated social loan, some $500 million in support of the Turkish economy, with a 367-day maturity. Thirty banks from 16 countries participated in this syndicated social loan, which was a first in Turkey.        —JK

Bank of the Philippine Islands (BPI) in 2024 issued and listed peso-denominated, fixed-rate, sustainable, environmental and equitable development bonds (SEED bonds) totaling nearly 34 billion Philippine pesos (about $587 million). The SEED bonds represent the bank’s largest thematic issuance to date. Proceeds will fund renewable energy, pollution prevention, and sustainable agriculture projects. They will further finance socioeconomic development activities, such as providing access to essential services for poverty-stricken communities.

The bank also served as a joint lead underwriter and bookrunner for Ayala Land’s 6 billion Philippine peso sustainability bond. Ayala Land is one of the largest property developers in the Philippines, and bond proceeds will be used by the company to implement energy and water-saving measures across its real estate portfolio. These measures include energy-efficient cooling systems and water harvesting/recycling systems. These and other activities bolster the bank’s goal of creating a 1 trillion Philippine peso corporate and SME portfolio supporting the UN Sustainable Development Goals. It hopes to reach that milestone by 2026.         —LS

CaixaBank has long been a global leader in microfinance, social bonds, and support for local communities.

The bank’s commitment was tested in October 2024, when record-breaking rainfall and flash floods battered Spain, causing casualties, massive disruptions, and economic losses, especially in the Valencia region. Caixa responded by opening a line of credit worth more than €2.5 billion for companies affected by the catastrophic weather. The bank also allowed commission-free cash withdrawals for customers with cards from other banks, for seven days, at the 785 ATMs it operates in Valencia.

In the first half of 2024, Caixa dedicated €1.08 billion to financing projects that positively impact local communities. This included its Velindre project, helping to fund the design, construction, and operation of an oncological hospital center in Wales. The bank also focused in 2024 on loans to finance projects linked to affordable housing, education, health, social and economic inclusion, and support for small and midsize enterprises in the Madrid area. —AS

Scotiabank’s goals are guided by its motto: “for every future.” This wholesale bank operates in the Americas and focuses on advancing the climate transition and promoting sustainable economic growth.

The bank’s enterprise-wide goals address climate risks by financing solutions for clients in carbon-intensive sectors, advancing net-zero initiatives to reduce emissions, and reducing its own emissions. Scotia’s Climate-Related Finance Framework outlines products and services that meet the bank’s goal of providing 350 billion Canadian dollars (about $246.2 billion) in climate-related finance by 2030.

Scotia’s credit due diligence processes address environmental and climate-related risks across its lending portfolio and are integrated into its credit-risk policies. Scotia Global Asset Management has adopted sustainable investment policies and publishes annual investment transparency reports.

In its Risk Appetite Framework, Scotia uses ESG performance metrics that are also included in its annual industry review process. The climate change risk assessment evaluates physical and transition risks and a client’s awareness of climate risks as a measure of management quality. —AM

Based in Malaysia, and one of the largest lending banks in Southeast Asia, Maybank is committed to serving the emerging markets in the 20 countries in which it operates. Here are some examples: In Indonesia, the bank has embarked on a social financing program to empower disadvantaged women and support growth through its partnership with Permodalan Nasional Madani. This microfinance company, focusing on women in its work with Maybank, strives to enhance the general welfare by supporting small entrepreneurs’ access to capital, mentorship, and capacity-building programs. Understanding that a healthy environment is key to any business’ success, Maybank is working with BenihBaik.com to support the construction of organic waste facilities in three cities in Bali. These waste management facilities will provide a cleaner environment for residents while also engaging in bioconversion processes that use living organisms to transform waste into substances such as methane that can later be used in energy production.           —LS

OTP Bank, formerly owned by the Hungarian state, now operates across 12 CEE countries. It continues to prioritize ESG targets in all its operations and is a leader in transition/sustainability-linked loan issuance. Such loans typically incorporate ESG criteria into the loan terms. Companies that meet or exceed predefined ESG performance targets may benefit from reduced interest rates, incentivizing sustainable practices. Conversely, failing to meet these targets may result in higher interest rates, thus ensuring a strong commitment to sustainability.

Green loans to corporates (including ESG-related loans) rose 38% year on year (YoY) in the third-quarter of 2024 (over Q3 2023), while retail loans rose 17% YoY. Green loans to corporates constitute around 6% of overall loans, to retail around 1.4%. In 2024, ESG financing as a proportion of the total for OTP reached 3.7%, more than double the 1.7% reached in 2023. According to Sustainalytics’ July 2024 report, “€1.26 billion have been allocated in the categories renewable energy, green buildings, and clean transportation, with projects located in Albania, Bulgaria, Croatia, Hungary, Romania, Serbia, and Slovenia.”         —JK

The sustainable infrastructure finance work of Societe Generale (SocGen) includes acting as initial coordinating lead arranger and joint bookrunner for the $8.8 billion SunZia Wind and Transmission project. The project consists of a 3.5 GW wind farm in New Mexico, along with a 550-mile transmission line to deliver this clean energy to Arizona. In Europe, SocGen served as senior mandated lead arranger for €4.2 billion (about $4.4 billion) in financing earmarked for the construction of a large-scale facility to produce green steel. Associated financing will fund the construction of a water treatment plant to supply the demineralized water necessary for green steel manufacturing. Among SocGen’s ESG-related loans are €2.6 billion in financing for the Fècamp 497 MW offshore wind farm in France. SocGen also acted as sole structuring bank for ReNew Power’s 600 MW, 35 billion Japanese yen (about $233.2 million), solar project in India; and as sole mandated lead arranger for nearly 11 billion Japanese yen in funding for Shizen Energy’s Kyushu (Japan) solar power plant.   

At the 2023 COP28 UN Climate Change Conference in Dubai, the UAE launched the $30 billion ALTÉRRA climate investment fund. Qatar aims for 20% of its energy from renewables by 2030, while Saudi Arabia’s Green Initiative focuses on long-term climate action. Sovereign wealth funds play a key role, investing in green technologies.

Banks are aligning with government policies to support sustainable finance, working with agencies to mobilize capital and promote innovation in the energy transition.

“Collaboration is essential to achieve sustainability goals, as no single entity can address the scale and complexity of the transition alone,” explains Leo Chi Wai Tong, head of Sustainability, QNB. “Partnerships between governments, financial institutions, and the private sector are key to creating a sustainable financing ecosystem to support eligible green and sustainable opportunities. Such collaboration enables the mobilization of capital at scale and ensures alignment with international standards, fostering transparency and credibility in the market. By working together, we can drive meaningful progress toward a more sustainable and low-carbon future.”

In December 2023, First Abu Dhabi Bank (FAB) announced an ambitious plan to lend, invest, and facilitate over 500 billion Emirati dirhams (about $136 billion) in sustainable and transition financing by 2030. Notable sustainable deals in 2024 include $1.14 billion syndicated senior debt facilities for the world’s first off-grid, multiple-utilities project serving a regenerative tourism project in Amaala, where FAB acted as bookrunner, mandated lead arranger, sole green loan coordinator, global and commercial facility agent, and onshore and offshore security agent. FAB also structured and led the Gems Education $3.25 billion, sustainability-linked, multicurrency term loan murabaha facility. FAB was one of the banks that successfully structured sustainable infrastructure provider Acciona’s green and sustainability-linked multicurrency $300 million facility. FAB also tops the green loan leadership boards in Europe, the Middle East, and Africa.

Multiple regional award winner QNB Group integrates sustainability into its financing activities through both mitigating ESG-related risk and capturing eligible opportunities. “We aim to reduce and mitigate ESG-related risks through our Environmental and Social Risk Management framework, which defines comprehensive exclusions, high-risk sectors, and prohibited activities for the group. We also see the need to evaluate the long-term viability and risk profiles of projects, thereby incorporating environmental and climate-related scenarios into risk models,” states QNB’s Leo.

“The most significant impact we can make is through our financing,” Leo continues. “By directing capital flows toward sustainable projects, we enable growth in key sectors and support our clients in the transition to a low-carbon ecosystem. This is enabled by QNB Group’s market-leading Sustainable Finance and Product framework, developed in line with the industry’s best practices, principles, and taxonomies. It allows us to transparently identify eligible green, social, sustainability-linked, and/or transition activities to deliver positive impact and support global sustainability goals.”

Emirates NBD Capital (EmCap) supported clients in mobilizing $34.3 billion of sustainable finance in 2024 across 21 deals, ranging from green to sustainability bonds; and EmCap is on track to meet its pledge of facilitating 100 billion Emirati dirhams of sustainable finance, as part of the UAE Central Bank initiative, by 2030. Emirates NBD Islamic’s Sustainability Sukuk supports clients across all asset classes by calibrating key performance indicators and sustainability performance targets for labeled loans. EmCap facilitated milestone deals as ESG adviser for the Dubai Taxi IPO, promoting a 100% eco-friendly fleet by 2027; the recent debut green bond by Istanbul Metropolitan Municipality; and the first green sukuk by DP World.

In October 2023, Arab Bank issued $250 million in additional tier 1 (AT1) capital securities. This was the first sustainable perpetual AT1 bond issue in Jordan. Since the bond was issued, Arab Bank has set up a sustainable finance register and identified bond-eligible projects that include 12 environmental projects across multiple countries in the region. The bank has also funded multiple loans for small and midsize enterprises. Arab Bank takes its corporate social responsibility (CSR) seriously and has adopted a strategic, measurable approach that delivers meaningful impact. CSR efforts are delivered via the Abdul Hameed Shoman Foundation and the Arab Bank’s CSR program Together. In 2023, Arab Bank’s total community investments reached over $25 million. The bank supports projects in areas including health, poverty, education, women-owned businesses, and climate.

Boursa Kuwait supports initiatives in the field of education and financial literacy through a diverse range of in-person and virtual training and knowledge-development programs and initiatives. The Boursa Kuwait Cares program is one of several initiatives that give back to the community through strategic partnerships, promotion of employee volunteerism, and application of resources in support of worthy causes. Boursa Kuwait was the first stock exchange in the Gulf region and the second in the Middle East to join the global initiative that is ringing the bell for women’s empowerment. Boursa Kuwait supports a children’s hospital, a hospice, and the Kuwait Red Crescent Society’s Basic Education program for low-income families and those facing financial hardship in Kuwait. Boursa Kuwait also provides essential aid—ranging from shelter and health care to clean water—to over 1,600 vulnerable families across the Middle East.

Global Finance: Turkey was once notable for being slow in adopting a sustainability agenda, but this has changed dramatically. Why?

Kaan Gür: The recent acceleration of green investments in Turkey can be attributed, first, to a growing awareness of the environmental and social consequences of unsustainable systems. Today, many investors prioritize environmental and social impacts alongside financial returns. Public authorities in Turkey have also taken significant steps to advance sustainability. In parallel, Turkey has seen a considerable rise in foreign capital inflows in recent years, particularly those aligned with the green transformation agenda.

At Akbank, we have always viewed green transformation as an opportunity for Turkey. Public authorities also share a similar outlook. Apart from the environmental and social benefits, the transformation of the Turkish market in line with sustainable development goals will increase its competitiveness in global trade.

GF: Akbank has won several of our Sustainable Finance Awards 2025. What makes it stand out compared to competitors?

Gür: We are truly honored to receive these prestigious awards from Global Finance. An effective sustainable finance structure requires a bank to align itself with both client needs and investor preferences, which increasingly emphasize ESG factors. Akbank excels in managing this balance by creating a sustainable finance ecosystem that offers capacity-building initiatives, digital sustainability services, and specialized partnerships. Our proactive engagement with clients to support their green transition remains a key driver of our success in this area. Furthermore, our firm commitment to achieving net-zero emissions by 2050 underscores our leadership in sustainable finance.

GF: What criteria do you use when assessing new projects’ ESG credentials?

Gür: We have integrated environmental and social risk evaluations into our loan policies. Beyond the traditional risk perspective, since 2021, Akbank has been providing sustainable financing in green and social categories under our Sustainable Financing Framework.

We continuously adapt to meet investor priorities and market expectations, where long-term environmental and social impacts are as critical as financial returns. In 2023, we updated the Sustainable Finance Framework to include new green, blue, and social thematic areas. As the first deposit bank in the Turkish banking sector to set concrete sustainability targets, Akbank remains committed to providing TL800 billion ($22.2 billion) in sustainable financing by 2030 under this framework.

GF: What sectors of the Turkish economy have the most promise for green projects?

Gür: We prioritize the transformation of the energy sector, as it serves as a catalyst for the decarbonization of all carbon-intensive industries. Significant investments in renewable energy have been made in recent years and continue to gain momentum. The incentive programs implemented by the Ministry of Energy and Natural Resources have played a key role in sustaining this growth.

That said, given Turkey’s exposure to climate risks, project-based climate risk assessments are essential before proceeding with renewable energy investments, particularly in hydroelectric. We expect this issue to gain even greater importance in the near future.

Green hydrogen holds substantial potential for Turkey, particularly as an export to the EU market, making it a key priority for investment. In addition, energy storage and grid modernization are essential to support the expansion of the renewable energy sector.

Green investments in carbon-intensive sectors such as cement, iron and steel, and chemicals are critical, prioritized for green transformation under the EU Green Deal. Energy efficiency also represents a key area of focus.

GF: What financial instruments do you consider most effective in driving the green agenda forward?

Gür: There is a clear need for innovative financing structures that actively incentivize sustainable practices. In this context, sustainable external borrowing instruments have emerged as highly effective tools in recent years. These include green bonds and sustainable syndicated loans.

However, for a developing country like Turkey, where small to midsized enterprises form a significant part of the economy, programs supported by international funds are the most impactful. Such structures not only provide financial support but also offer technical consultancy services to accelerate the green transformation of various sectors.

Global Finance: What are Standard Bank’s specific targets for reducing its financed emissions, and how is it achieving them?

Sasha Cook: We have committed to achieving net zero for our own operations by 2040 and are three years ahead of schedule; for our portfolio of financed emissions, by 2050. This commitment is integrated into group-wide policies and processes and informs our credit decisions. We continue to engage with clients across all segments and sectors to understand their climate goals and transition plans. And we have set clear parameters that limit our provision of finance to existing power-sector clients generating power from coal, oil, and gas-fired plants.

We will not finance the construction of new coal-fired power plants or expansion of the generating capacity of existing coal-fired plants. We will consider financing oil and gas only when the projects are low-carbon intensity and will result in lowering the average carbon intensity of our portfolio, and where clients provide details of current or expected carbon emissions and have an approved plan to reduce scope 1 and 2 emissions.

GF: Which sustainable finance instruments help mitigate climate change’s impact?

Cook: Various categories contribute positively, namely green-labeled instruments in loan, bond, and guarantee format (specifically, in the subcategories of renewable energy, green buildings, sustainable water, and biodiversity-related), blue-labeled instruments (supporting water-related and marine projects), social-labeled instruments (focusing on financing affordable basic infrastructure), and sustainability-linked instruments where key performance indicators are linked to positive environmental impact and performance.

GF: Why is it important that African banks play a leading role in creating a sustainable future for the continent?

Cook: As allocators of capital, financial institutions play an important role in driving positive impact. African banks also play a key role in facilitating international capital flow to the continent, to support sustainable projects.

Additionally, African banks play a critical role in developing local debt capital markets, ensuring that capital can be raised from local institutional investors to support projects that deliver positive impact, reducing reliance on hard-currency funding sources. Banks also have good governance policies, processes, and structures that lead to successful project implementation and ensure that funds are channelled to impactful outcomes.

GF: How can Africa balance reducing CO2 emissions with plugging energy infrastructure gaps?

Cook: The energy “trilemma,” as it is sometimes referred to in Africa, requires balancing clean energy, energy access, and affordabale energy. The focus cannot therefore solely be on increasing large-scale renewable energy capacity. There is also a need to fund innovative smaller scale solutions like mini-grids and improvements to transmission infrastructure that facilitate increased grid capacity for renewable energy. Funding also needs to be allocated to the South African government’s recent BESS [Battery Energy Storage Solution] program; we have successfully closed financing for several of the first large-scale BESS battery storage projects, which will result in improved access to energy by allowing excess renewable energy to be stored and used when needed.

Africa contributes less than 4% of global greenhouse gas emissions and thus does not face the same level of transition risk as the developed north. Banks can facilitate, promote, and support energy access in all economic segments through renewables and, where required, renewables integrated with thermal power generation.

Standard Bank can boast two key initiatives in this regard: PowerPulse and LookSee, which are aimed at improving energy access using clean energy in the residential and commercial segments of the economy.