This is the Executive foreword from IIGCC’s 2025 annual report, co-written with Faith Ward, Chair of the IIGCC Board and Chief Responsible Investment Officer at Brunel Pension Partnership.
It hasn’t been a straightforward year for investors integrating climate considerations into their strategies. The political and legal environments have grown more fragmented, volatile and uncertain. We have seen rollbacks on climate policy. At the same time, the physical risks of climate change are becoming increasing visible, with regulators, insurers and research institutes all warning about wider systemic impacts.
Despite these complex geopolitical challenges, one thing is clear: the transition is happening. A clear economic shift is underway as corporates, industries and economies adapt to, drive and, crucially, profit from the transition. It is one of the defining trends of the next decade presenting once-in-a-generation investment opportunities.
The momentum behind clean energy investment is undeniable; the world now invests almost twice as much in clean energy as it does in fossil fuels according to the International Energy Agency. This is not just a temporary spike – it’s a structural shift. Competition is driving innovation and opportunity, whilst geopolitical shifts are creating new openings. Even as some countries retreat on climate, others have an opportunity to step forward and harness the economic benefits of the transition.
Despite challenging headwinds, we have seen continued climate ambition across the investment community. The science that underpins their commitments and action remains unchanged; in order to avoid the worst impacts of climate change and the risks this poses to their portfolios, the increase in global average temperature needs to be held to well below 2°C and ideally 1.5°C, in line with the goals of the Paris Agreement. Meanwhile internationally, courts are beginning to define legal obligations around climate with an increasing risk of climate litigation for companies, investors and states, which can arise from a failure to engage with climate and its implications.
So, against an increasingly complex backdrop, there are huge grounds for optimism. This was very much the sentiment at our IIGCC Summit this year, our largest event to date and held during the biggest London Climate Action Week. We were joined by more than 450 people from across the climate and investing landscape, in person and online.
It was an honour to be addressed by Al Gore, former US Vice President, who highlighted the critical role investors can play in the net zero transition.
Climate change and its associated impacts pose material financial risks to investors, at both asset and systemic levels. Integrating climate related risk and opportunity into investment decisions is a common sense approach in support of investors’ long-term financial goals.
At IIGCC, our purpose and mission remain unchanged: bringing the investment community together to navigate the risks and opportunities of the transition and support progress towards a net zero and climate resilient future.
We are here to help you, our members, navigate the transition – both the risks and the opportunities.
We remain focused on supporting our members in solving the challenges they face when addressing climate change in their individual contexts and across our four strategies priority areas of net zero, nature, adaptation and resilience and emerging markets and developing economies.
Offering the latest thinking for our members, informed by investors, remains core to what we do. This is centred around providing innovative platforms, frameworks and guidance to help investors manage climate risks and opportunities within investment strategies; undertake effective stewardship of assets; shape a supportive policy and regulatory environment; and influence wider stakeholders to contribute to a net zero and climate resilient financial system.
Our Board plays a crucial role in supporting the work of IIGCC and we thank them for their continued dedication and valuable insights. The Board is committed to continuous improvement, and this year undertook another board effectiveness exercise, supported by an independent third party. The outcome highlighted strong board member relationships and quality of discussions, and showcased improvements in risk identification and management since the previous review in 2024. The Board intends to conduct reviews on an ongoing basis.
A dual track: Mitigation and resilience
Net zero continues to be at the heart of our work. We expanded net zero guidance, through and associated with the Net Zero Investment Framework (NZIF), into new areas including index investing, considerations for EMDEs and strategic asset allocation.
Through our membership, investors can participate in five engagement initiatives which together consider more than 270 companies in the transition. We launched a new suite of resources – known as The Engage Series – to support investors seeking to engage with stakeholders within sectors critical to the transition, including grids, steel, oil and gas, and food and agriculture, with more to follow next year.
We have continued to advocate for progressive climate policies and regulation at UK and EU level. This year, this involved a significant effort to maintain ambition in EU sustainable finance regulation. The joint statement we co-drafted on the EU Omnibus, warning that rollbacks in corporate disclosure rules would harm competitiveness, grew to 500 signatories including almost 200 investors.
But mitigation alone can only go so far. It has become clearer than ever that we need a dual-track approach to mitigation and adaptation and resilience as the cost of failure to tackle physical climate risks rises. We are not talking about something far into the future – we are talking about something happening today. It has been estimated that total disaster costs now exceed $2.3 trillion annually when including indirect and ecosystem impacts – this is ten times what is reported in official figures. The urgency to invest in adaptation and resilience has never been greater and it must be done in parallel with mitigation, rather than as an alternative.
We have significantly expanded support for members on developing climate resilience, building on strong foundations established over the last few years. We released the Climate Resilience Investment Framework to support investors seeking to develop individual climate resilience goals and implementation strategies. A ‘sister’ framework to NZIF, it is designed to be complementary, adopting the same broad structure and guiding principles.
But it is not all about risk – it is about opportunity too and highlighting the incentives for investing in resilience. We published the second iteration of the Physical Climate Risk Appraisal Methodology (PCRAM 2.0), a practical guide for understanding and managing the physical climate risks that climate change poses to real assets, appraising the adaptation options and linking it back to asset values. Three case studies were published to accompany this, which examine the application of PCRAM to assets including solar, mini-hydro, maritime transport and port infrastructure, and real estate – collectively, the case studies make the case for resilience investment.
Demonstrating progress on nature
Taking action on nature where it intersects with climate remains an important priority for us and our members. Nature Action 100 continued to support wider investor engagement on nature and biodiversity loss. Its progress report, released in October ahead of COP30, demonstrated the growth of the initiative and positive developments emerging from investors engagements so far. This includes almost 50 companies making plans to address nature-related issues and over 30 have begun demonstrating progress against the initiative’s investor expectations.
Tackling deforestation sits at the heart of the climate-nature nexus, which is vital to mitigating economic systemic risk, reaching net zero and the goals of the Paris Agreement. We are excited to pick up the mantle of investor action on deforestation, building on the strong foundations and progress of FSDA, with the launch of our Deforestation Investor Group at the start of 2026. And to support investors integrating deforestation into their investment strategies, we have developed deforestation guidance that is associated with NZIF.
We have also played an important role in advocating against the delayed implementation of EU Deforestation Regulation. We engaged with key stakeholders in the EU to highlight finance sector support for the regulation alongside businesses and civil society. This collective effort contributed to the European Commission withdrawing its initial proposal to delay implementation by one year, demonstrating the tangible impact of the platform we provide for sharing investor perspectives.
Providing a platform for capital mobilisation in EMDEs
The EMDE transition, or lack thereof, poses a global systemic risk to institutional investor portfolios. This year we were pleased to provide further practical support for investors and encourage wider progress by playing a convening role in shaping institutional platforms for investment mobilisation.
Building on our growing expertise, we were delighted to be appointed as secretariat of the EMDE Investor Taskforce, an industry-led initiative convened by UK Government Ministers which aims to establish a structured dialogue between investors and governments on EMDE capital flows. In support of and complementary to this work, at COP30 we called for strengthened collaboration between governments, multilateral development banks, and investors to mobilise climate finance in EMDEs, supported by clear policies, timelines and transparent reporting.
We also expanded engagement across EMDEs within our engagement initiatives, with NZEI and BERI broadening their focus to engage with more companies and banks in EMDEs. This illustrates growing investor interest and the expanding scope for climate engagement in this area. And we published supplementary guidance to support investors looking to incorporate EMDE nuances into net zero investment strategies, consistent with their NZIF objectives.
Celebrating 25 years of IIGCC
Next year will mark 25 years of IIGCC. It has come a long way since 2001, when a group of investors sought to better understand the risks of climate change to their assets and to consider what might need to be done to address that risk.
When Stephanie joined as the first full time employee in 2005, the material financial risks and opportunities of climate change were not widely understood across the wider investment community. As we moved into the 2010s, a series of landmark moments led to a fundamental shift in the conversation. This included the Paris Agreement in 2015, where 196 countries committed to a goal of limiting global temperature rise to well below 2°C.
Whilst it may feel like that global consensus on net zero is fraying today for a multitude of reasons, the impact of the Paris Agreement cannot be underestimated. Its repercussions still underpin much of what investors and IIGCC are doing today.
It has not all been plain sailing – and nor should it be. Tackling climate change on a global scale and limiting the worst impacts from rising temperatures could be the greatest challenge we face. But the transformation so far should not be underestimated: investor engagement and action; policy and regulatory developments; progress towards the goals of the Paris Agreement.
This year we saw some countries fail to provide ambitious NDCs – or in many instances, anything at all. Simultaneously many of the same countries continue to push for progress on the global stage, highlighted by the recent drawn out and lively negotiations in Belém, where we heard coalitions of both countries and of non-state actors (including us), calling for a roadmap on transitioning away from fossil fuels. Whilst the final deal may have left many feeling disappointed about the lack of ambition and clarity, it was positive to see support for the transition from stakeholders across the economy.
The best way to navigate the complexities today is to have a clear focus on where progress can be enabled and achieved. At IIGCC, we have a valuable role to play in supporting our members. We will continue to expand on our work to create pragmatic, targeted and implementation-focused guidance, tools, frameworks and resources. Working across our four strategic priorities and the ever increasing interconnectivity between them – net zero, adaptation and resilience, EMDEs, and nature – we will continue to help make the case for climate-related action with a laser focus on financial materiality.
Thank you
All of this is made possible by our brilliant membership. Thank you for your continued support, your time and for the inputs which help to inform our work. We remain committed to serving you and helping you to tackle the challenges and to seize the opportunities ahead, in 2026 and beyond.
Read 'Navigating the transition: IIGCC annual report 2025'. If you would like to know more about becoming a member of IIGCC, why not get in touch today?