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The Climate Solutions Gap

... includes ...

• Introduction: Climate Change Threatens Retirement Savings
• Why Pensions Must Prioritize Investing in Climate Solutions
• What Climate-Solutions Investing Strategies Should Include
• Scoring Methodology
• Assessment of Major U.S. Pensions’ Approach to Climate-Solutions Investing
• Recommendations to Strengthen Pensions’ Climate-Solutions Investing Strategies

... includes ...

• Sustainable finance: Concepts, approaches and the ecosystem
• Approaches within sustainable finance
• Sectors and functions in sustainable finance
• Other roles in sustainable finance (direct, indirect and adjacent)
• How to enter, or transition into sustainable finance
• Case studies

... includes ... global risks ranked by severity:

Short-term (2 years)

1. Geoeconomic confrontation
2. Misinformation and disinformation
3. Societal polarization
4. Extreme weather events
5. State-based armed conflict
6. Cyber insecurity
7. Inequality
8. Erosion of human rights and/or of civic freedoms
9. Pollution
10. Involuntary migration or displacement

Long-term (10 years)

1. Extreme weather events
2. Biodiversity loss and ecosystem collapse
3. Critical change to Earth systems
4. Misinformation and disinformation
5. Adverse outcomes of AI technologies
6. Natural resource shortages
7. Inequality
8. Cyber insecurity
9. Societal polarization
10. Pollution

... covers ...

• What are controversial weapons?
• Which weapons are classified as 'controversial' under ESG frameworks?
• Why have 'controversial weapons' exclusions become more important for investors?
• Why are 'controversial weapons' still debated in ESG?
• How do ESG ratings firms identify controversial weapons involvement?
• Revenue thresholds in controversial weapons screening
• How many listed companies are involved in controversial weapons?

The Carbon Majors database traces 34.7 GtCO2e of greenhouse gas emissions in 2024 to the 166 oil, gas, coal, and cement producers, a 0.8% increase from these entities’ total emissions in 2023.

Just 32 companies were linked to over half of global fossil fuel and cement CO2 emissions in 2024. As shown in Figure 1 in the report, the top 10 companies by emissions, cumulatively responsible for 27.6% of global fossil CO2 emissions in 2024, were all fully or majority state-owned companies.

With 30+ years across public and private sectors, Rory unpacks:

• What the ESG “pushback” really is, and how to respond
• Which investor collaborations still matter now the tide has gone out
• How asset owners can clarify long-term, intergenerational purpose
• Why sustainable finance needs an Economics 101 reset

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In 2018, CPP Investments became the first pension fund manager to issue a green bond, and has been a consistent issuer of green bonds since then. Green bonds provide CPP Investments with additional funding as we pursue eligible investments (i.e., the assets that we list on the green bond register as a part of our Green Bond Framework “Framework”).  

CPP Investments has issued eleven green bonds, totaling more than $11.5 billion gross. The issuances have been in Australian dollars, Canadian dollars, euros and U.S. dollars. Our Sustainable Investing Committee (SIC) determines  which assets are eligible for green bond proceeds in accordance with the Framework. 

Recent policy developments across regions show a trend of governments relaxing their climate and environmental regulations. These policy shifts may lead to lower operational and compliance costs for companies within the utilities sector. However, deregulatory action could also introduce financial uncertainty and operational challenges for companies in the medium to long term.

This report highlights key trends within the utilities sector, with a focus on the US. Using material ESG issues as proxies, the report assesses companies’ capacity to manage risk amid environmental deregulation and examines the potential risks associated with changing climate policies.

Readers of this report will learn about:

• Shifting climate and environmental regulations across regions.
• The potential risks environmental policy rollbacks could pose to companies in the utilities sector.
• How US utilities companies are managing the potential risks stemming from regulatory volatility.

Key Insights:

• In the first half of 2025, Climate Transition funds represented over half (54%) of all climate asset funds in Europe, and were the largest climate fund category in the US at 44%.
• Climate Transition funds were the only category of climate fund assets to attract inflows in both Europe (USD 1.6 billion) and the US (USD 580 million) in the first half of 2025.
• Passive funds, including those that track Paris-Aligned Benchmarks and Climate Transition Benchmarks, dominated the global Climate Transition funds category, reaching USD 225 billion in assets as of June 2025, and making up 74% of global investment in Climate Transition funds.

Key Insights:

• Asia is transitioning from a passive role in global human rights compliance to actively shaping its own human rights due diligence frameworks, driven by trade pressures and ambitions to align with international standards.
• Regulatory momentum in countries like South Korea, Thailand, Malaysia and Indonesia could trigger a regional domino effect.
• To stay ahead, companies should proactively strengthen human rights due diligence systems through mapping supply chains, engaging stakeholders, and aligning with the UN Guiding Principles and OECD Guidelines. Investors should monitor regulatory developments and portfolio readiness. 

Sustainable investing enters 2026 at a critical juncture. The past year brought political headwinds and regulatory setbacks, prompting some investors to question the importance of sustainability. Discover the key trends that could shape sustainable investing in 2026. 

Readers of this Morningstar Sustainalytics report will learn how:

• Sustainable investing is being recalibrated in response to changing market conditions.
• Global ESG regulations are evolving.
• Greater attention will be paid to physical climate risks and adaptation, while transition remains a priority.
• Energy transition infrastructure is driving private climate investing.
• Innovation and stronger standards are bolstering the green, social and sustainability-linked bond market.
• Rising investor concerns will drive deeper integration of biodiversity risks.

As carbon-intensive exports face rising border costs, resource-efficient firms are positioned to retain competitiveness and reduce transition risk

As Globalisation has increased, developed markets (DM) are increasingly outsourcing their manufacturing, and the associated emissions, to emerging markets (EM) in a process known as ‘carbon leakage’. The EU’s Carbon Border Adjustment Mechanism (CBAM) is one of the clearest examples of international trade policy designed to reduce global carbon emissions by addressing this problem and simultaneously ensuring that EU producers are not undercut by their higher emissions competitors.

Introduced in 2023 with a transitional reporting phase, the EU’s Carbon Border Adjustment Mechanism (CBAM) will enter its definitive phase in 2026, at which point a financial obligation will apply to imports of steel, cement, aluminium, electricity and certain fertilisers.

The market for orange bonds is nascent but gradually expanding, particularly in emerging markets.

The orange label is designed for a specific purpose, so while issuances may rise as more investors seek scaleable solutions and companies prioritise social issues, including gender-related topics, they will likely continue to play a niche role.

Beyond the official COP negotiations in Brazil, market participants built a robust complementary agenda of discussions aimed at mobilising USD1.3 trillion a year in climate finance for developing countries by 2035. Sustainable Fitch highlights its main takeaways from the meeting, focusing on emerging markets.

• Takeaway #1: EMs Continue to Face Barriers in Unlocking the Full Potential of Sustainable Finance
• Takeaway #2: Private and Blended Capital Important for Supporting EMs
• Takeaway #3: Transition Finance Is Viewed as Relevant Opportunity for EMs
• Takeaway #4: Nature and Biodiversity Cemented as a Core Focus for EMs
• Takeaway #5: Social Dimensions Embedded in Core Climate Discussions

Sustainable Fitch expects 2026 to be pivotal for sustainable finance, with transition finance coming of age and potentially providing renewed impetus for issuance.

The operating environment may remain challenging in 2026, amid global geopolitical pressures, lasting ESG backlash in North America, and a comprehensive regulatory reset in the EU.

"The Five Key Trends to Watch in Sustainable Finance in 2026 are:

• Transition Finance comes of age with its own label
• Specialised sub-labels multiply but face challenges
• Adaptation investment - the next force amid rising physical risks
• Investors and issuers recalibrate amidst regulatory reset
• Private debt to play a greater role across impact and transition themes"