Our 2026 analysis finds encouraging progress has been made, whereby capital is supporting some sectors and technologies central to the transition, however, significant challenges remain:
- Differences in reporting methodologies make it nearly impossible for investors to compare and understand companies’ progress and impact over time.
- Financing gaps persist across several transition-critical sectors, whereby implementation actions continue to lag behind ambition.
- Stewardship has not yet started to demonstrate measurable outcomes of investor influence.
- Overall, transition plans and AGM processes need further improvements to enable better access and better investment decisions for investors.
- Consistent, reliable and comparable transition information is not yet the norm, which is another key barrier for European investors.
Despite these challenges, our analysis identifies four clear priorities for ensuring that transition investing delivers more effectively for investors and the real economy:
- Accessibility | Expanding access to credible transition opportunities and enabling wider individual-investor participation.
- Better Investment Decisions | Making transition information easier to compare while enabling more informed investment decisions.
- Better Capital Allocation | Directing more capital towards credible transition activities, companies and sectors.
- Effective Stewardship | Focusing engagement and reporting on measurable outcomes rather than activity alone.
At its core, transition investing seeks to direct capital towards companies, activities and technologies that can contribute to the transformation of the economy - including businesses in carbon-intensive sectors that have credible plans to reduce their environmental impact over time.
Over the past three years, the foundations of this market have developed considerably. Companies and other reporting entities have adopted transition plans. Policymakers and regulators have developed disclosure frameworks intended to improve the availability, reliability and comparability of transition-related information. Asset managers and financial institutions have introduced new investment products, capital-allocation approaches and stewardship practices designed to support corporate transformation. Investors, meanwhile, are increasingly seeking credible ways to identify transition opportunities, that help their financial plans and visions. Together, these developments have established much of the architecture required to attract capital towards long-term sustainable economic transformation.
Drawing on the report’s findings, BETTER FINANCE proposes several practical concepts and priorities to strengthen the next phase of transition investing.
1. MAKE TRANSITION PROGRESS EASIER TO COMPARE AND MONITOR
What information do investors need?
Stronger comparability and longitudinal reporting would help investors distinguish commitment from implementation and assess whether companies are delivering credible transition outcomes, as currently methodologies vary considerably.
2. SUSTAINABLE FINANCE DISCLOSURE REGULATION: A KEY OPPORTUNITY
How to enable retail participation?
A dedicated transition product category could help individual investors identify credible transition strategies, strengthen confidence in the market and channel more retail capital towards the transition of the European economy.
3. FROM ENGAGEMENT ACTIVITY ALONE TO MEASURABLE OUTCOMES
How to enable investor influence?
Stewardship reporting should increasingly demonstrate where investor engagement and voting contribute to changes in corporate behaviour, transition implementation and long-term value creation.
Success by 2030 will ultimately depend not on the number of transition frameworks, investment products or corporate commitments, but on whether investors can identify credible transition opportunities with confidence and whether capital contributes to a more resilient, competitive and sustainable real economy.
- Alexandra Maczyńska, Managing Director, BETTER FINANCE
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