Impact investing consultancy Phenix Capital said uncertainties surrounding national net-zero targets and requirements around the world were among factors giving impact investors food for thought.
There has been no growth in the percentage of funds aligned with net-zero targets in Phenix Capital’s impact database since its 2024 report, the Dutch consultancy said its latest analysis. Phenix Capital’s 2025 Net Zero report suggests that investors and managers face uncertainties over the speed and intensity of the energy transition.
The 968 impact funds that had net-zero targets amounted to 32.8% of the total number of impact funds in the database, representing a 0.1% fall in share from the figure in Phenix’s 2024 report. This flattening off follows a decade of overall growth – in 2015, the percentage of impact funds in the database that were net zero-aligned was 25%.
Uncertainty and wavering support
The consultancy said there were myriad reasons why impact investors and managers alike were not becoming more committed to net-zero aligned funds. These included wavering support for net zero by some of the world’s largest asset managers and the challenges created by president Donald Trump’s decision to take the US out of the Paris climate change agreement for the second time.
From an investor perspective, a lack of high-quality data and uncertainty regarding future government policies around the world were regarded as significant global challenges, according to the report.
Continuing controversy over some aspects of net zero targets, including concerns over their effectiveness, possible economic and social side effects and differing views on how best to achieve them created further uncertainties. Defining whether net zero goals should relate to carbon emissions or all greenhouse gas emissions added another layer of complexity to fund managers’ decision making, Phenix said.
The report noted the 59% of non-zero aligned funds were open for investment, of which 35% were evergreen impact funds. These net-zero aligned funds totalled 612, offered by 340 managers.
In terms of asset class, net zero-aligned funds were split around 50/50 between real asset impact funds and private equity funds. Real asset funds accounted for 29% of total funds (down from 34% in 2024), while private equity funds comprised 28% (down from 30% in 2024). A further 19% were investing in the public equity (down from 23%) and 12% in private debt space.
European hotspot
Geographically, Europe accounted for the largest share of impact funds with net-zero targets (40.6%), followed by global funds (30.8%) and North America (27.3%). Just 11.2% of the net-zero aligned impact funds focused on Asia, including China and India. Some of the funds targeted more than one region.
Phenix said a look at the UN sustainable development goals on which net-zero aligned funds were focused showed that SDG7 on affordable and clean energy (497 funds) and SDG13 on climate action (390 funds) were the leaders, as might be expected. Next on the list were SDG12 on responsible consumption and production (332 funds) and SDG9 on industry, innovation and infrastructure (317 funds).
The report also highlighted the leading role being played in net-zero investing by pensions schemes, whose fiduciary duty increasingly includes the need to take account of climate risk on the investments – and lives – of their beneficiaries. Pension funds are the largest category of investors in net-zero aligned impact funds (282), followed by foundations (223) and development finance institutions (192).
In the UK, schemes with over £1bn in assets under management are required to consider their exposure to climate risk to comply the Taskforce on Climate-related Financial Disclosures’ standards. One of these, the London Pensions Fund Authority committed to investing around £250m in environmental solutions assets to support its net zero ambitions, while Wiltshire Pension Fund has a net-zero goal for its investment portfolio by 2050 and has published its first climate and nature report describing how it plans to do it, Phenix noted.
