New research from Net Zero Investor has found that asset owners who revise interim portfolio emissions targets are more likely to adopt transition investing plans. These shifts reflect an emerging trend across the institutional investor market indicating intent to invest in hard-to-abate sectors which carry higher short-term emissions footprints.
The findings come from the pilot NZI Climate Capital Allocation Index (CCAI) 2026, published today, which finds climate capital allocation and manager selection undergoing their biggest shift in decades.
Our analysis of public disclosures and investment strategies shows that asset owner demand for investment opportunities in hard-to-abate sectors is set to rise. In addition, asset owners expect fund managers to expand engagement with high-emitters and assess the credibility of corporate transition plans.
The pilot edition of the CCAI covers 22 asset owners across a spectrum with two strategic tilts: Reducing Financed Emissions (RFE) on one end and Financing Reduced Emissions (FRE) on the other.
Beyond portfolios
In the aftermath of the Paris Agreement, asset owners set their sights on portfolio decarbonisation. They set interim and long-term net zero targets, deployed more capital in climate solutions, implemented investment exclusions linked to climate risk and set expectations for asset manager alignment.
“Asset owners are realising that when portfolios decarbonise faster than the world outside them, long-term climate risks remain unmitigated”, says NZI head of research and the report’s lead author Atharva Deshmukh.
A decade later, investor attention is shifting to the world beyond portfolios. Asset owners are revamping their climate investment strategies to integrate transition investing. Investors are now placing the spotlight on real-world decarbonisation and the hard-to-abate sectors that are becoming harder to ignore.
The evidence suggests that transition investing is being implemented in addition to, not as a replacement for, climate solutions investing.
To find out more, click on the link below to access the index.
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