Podcast: When energy security is the new currency

❓ Question:

As geopolitical tensions rise, physical climate risks intensify and energy systems undergo rapid transformation, how are institutional investors approaching climate investing in 2026, and where do they see the biggest opportunities and challenges ahead?

✅ Answer:

According to Lucian Peppelenbos, climate and biodiversity strategist at Robeco, institutional investors remain committed to climate investing, but their motivations are evolving. While climate change remains an important consideration, investors are increasingly focused on performance, energy security and managing physical climate risks rather than pursuing net-zero objectives for their own sake. The findings come from Robeco's 2026 Global Climate Investing Survey, which surveyed 300 institutional investors representing US$35 trillion in assets.

Peppelenbos argues that climate investing is entering a more mature phase. Rather than being driven primarily by ambition and commitments, investors are now concentrating on practical investment opportunities created by the energy transition, particularly in renewable energy, energy infrastructure, electricity grids and battery storage. At the same time, they are becoming more aware of the financial consequences of climate-related physical risks, including floods, bushfires and extreme weather events.

🌟 Climate investing may have moved beyond the hype cycle

One of the survey's most notable findings is that investor enthusiasm for climate investing appears to have stabilised after several years of decline. Peppelenbos describes this as a "net-zero hype cycle". Investor support reached very high levels several years ago before falling as the realities and complexities of the transition became clearer. The latest survey suggests that downturn may have bottomed out, with investors expecting climate considerations to become increasingly important again over the coming years.

🌟 Energy security is becoming a powerful investment driver

While climate policy remains important, many investors now view energy security as an equally compelling reason to invest in the transition. Peppelenbos says ongoing geopolitical tensions, including disruptions to global energy markets, have strengthened the case for domestic renewable energy generation. Renewable energy is increasingly being viewed not only as a decarbonisation solution but also as a way to reduce exposure to geopolitical risks associated with fossil fuel dependence.

🌟 Renewables, electricity grids and batteries remain investment favourites

Institutional investors continue to see attractive opportunities in renewable energy, electricity grids and related infrastructure. However, battery storage is emerging as an increasingly important theme. As renewable generation grows, storage solutions are becoming critical for balancing electricity supply and demand. Peppelenbos says investors are paying closer attention to batteries because they help support more resilient and secure energy systems.

🌟 Investors expect a disorderly climate transition

The survey found that many investors do not expect an orderly path to net zero. Instead, an overwhelming majority anticipate a future characterised by both significant transition risks and increasing physical climate risks. In other words, investors expect climate action to occur too slowly to fully avoid the consequences of global warming, creating challenges on multiple fronts for economies, businesses and portfolios.

🌟 AI and data centres are being viewed as long-term sustainability enablers

Artificial intelligence and expanding data centre infrastructure are often criticised for increasing energy and water consumption. However, investors generally believe the long-term benefits will outweigh the short-term costs. Peppelenbos says many respondents view AI as creating upfront resource demands that could ultimately lead to a more efficient economy with lower emissions and better resource utilisation over time.

🚩 Physical climate risks are moving into investment decision-making

Investors are becoming increasingly concerned about the direct impact of extreme weather events on asset prices. According to the survey, many respondents expect physical climate risks to influence asset valuations within the next five years. As a result, investors are adapting portfolio construction, strategic asset allocation and stock selection processes to better account for these risks.

🚩 Data challenges remain a major obstacle

Despite growing awareness, incorporating physical climate risk into investment decisions remains difficult. Peppelenbos explains that climate-risk modelling has traditionally been used within risk-management teams rather than investment teams. The challenge now is converting climate scenarios and risk analysis into practical inputs that can be incorporated into investment decisions and asset valuation frameworks.

⚠️ Insurance markets may face increasing pressure

Climate risk is creating both opportunities and concerns for insurers. Demand for insurance, reinsurance and catastrophe-related products is growing, but there are also concerns about whether some risks will remain insurable. Peppelenbos points to instances where insurers have retreated from high-risk regions, potentially exposing homeowners and creating longer-term implications for property values and market stability.

⚠️ Regional approaches to climate investing remain very different

The survey highlights significant regional differences in investor sentiment. European and Asia-Pacific investors continue to place greater emphasis on climate investing than their US counterparts. While enthusiasm in Europe has moderated since its peak, Asia-Pacific investors have remained relatively consistent in their approach, suggesting that climate investing continues to evolve differently across regions.

🌟 The next phase of climate investing may be more pragmatic

Peppelenbos believes the future of climate investing will be less ideological and more commercially focused. Investors are still pursuing renewable energy and climate-related opportunities, but increasingly because they see strong long-term economic fundamentals and attractive investment outcomes rather than simply because they align with net-zero goals.

💡 Why it matters:

Climate investing is no longer just about emissions targets and sustainability commitments. Institutional investors are increasingly approaching the transition through the lens of energy security, economic resilience and risk management. The growing focus on batteries, electricity infrastructure, renewable energy and physical climate risks suggests that climate-related investing is becoming more integrated into mainstream portfolio construction. For investors and asset owners, understanding these changing priorities may help identify where capital flows, opportunities and risks are likely to emerge over the next decade.

🎙️ Sources:

Lucian Peppelenbos, climate & biodiversity strategist, Robeco

Michelle Baltazar, host, The Greener Way

Robeco 2026 Global Climate Investing Survey

⏱️ Timestamps:

00:00 - Investors expect a "too little, too late" climate transition

00:13 - Introduction to Robeco's 2026 Climate Investing Survey

01:10 - Who participated in the survey and why it matters

02:01 - Climate investing's hype cycle and changing priorities

04:00 - Regional differences between Europe, Asia-Pacific and the US

05:27 - Why investors expect both transition and physical risks

06:15 - Energy security's growing influence on investment decisions

08:07 - Renewable energy, grids and battery storage opportunities

09:01 - AI, data centres and sustainability impacts

10:42 - Net-zero goals versus investment performance

12:22 - Physical climate risks and asset pricing implications

14:25 - Insurance markets and climate-related challenges

15:39 - Key investment takeaways from the survey

🌿 We record on Gadigal Land and pay our respects to the traditional custodians of country and elders past and present.