As COP30 kicks off this week in the Amazon rainforest - with notable absences including Prime Minister Anthony Albanese - financing the green energy transition is in the spotlight.
Highlighted as crucial for mitigating and managing physical climate risks, energy and private sector engagement have been singled out at the event as key priorities.
Attending the summit, the MSCI Institute founding director, Linda Eling-Lee observed how investor focus is increasingly divided between environmental, social, governance (ESG) priorities and complex geopolitical challenges.
“The energy transition and the physical impacts of our changing climate compete with AI, geopolitics and domestic challenges for investor attention,” Eling-Lee said.
At the same time, with $500 billion in investment required for Australia to cut emissions by 70 per cent by 2035, the MSCI Institute’s latest Transition Finance Tracker has outlined how private-sector capital is driving much of the shift toward a low-carbon economy.
“[These challenges] complicate the path to a cleaner and more resilient global economy but also underscore the role of capital in getting there,” Eling-Lee said.
Between 2018 and 2023, the report found that more than half of the USD$1.9 trillion climate project finance funds came from the private sector, while also growing at a faster rate at 30 per cent CAGR versus 18 per cent for public finance.
The findings align with earlier comments from Cameron Farrar, head of distribution at Federation Asset Management, who noted that many investors are turning to private markets for authentic ESG exposure. At the time, he pointed to Australian projects such as wind farm developments and large-scale battery installations as opportunities rarely found in public markets.
Meanwhile, echoing Capital Group’s 2025 ESG Global Study - which found that ESG investing has remained resilient amid global uncertainty - the report showed that as of September 2025, assets in public climate-themed funds had climbed nearly 12 per cent to US$625 billion, continuing the double-digit growth of recent years.
Corporate risk resilience
MSCI Institute has also recently released its Corporate Resilience Survey, which surveyed over 550 global organisations, including 40 from Australia, across nine industries to assess how physical climate risks, such as extreme heat and flooding, affect corporate operational resilience.
Looking back over the last decade, the report stated that extreme weather events have cost the global economy in excess of US$2 trillion. Australia, in particular, has experienced some of the world’s highest cumulative losses, with annual damages projected to reach $8.7 billion by 2050 if robust climate action is not taken.
According to the report, almost two-thirds (63 per cent) of respondents believe climate-induced physical risks are significantly impacting the economy, while over 80 per cent of organisations said their operations have been directly disrupted by extreme weather in the past five years.
Meanwhile, two-thirds of companies surveyed said the effects of extreme weather have affected employee wellbeing, damaged critical infrastructure, or reduced revenue.
However, while 68 per cent of organisations stated that they were concentrating on near-term physical risks in the next two to five years, long-term management remained largely overlooked.
In response, the report highlighted how global organisations are beginning to manage climate risk more proactively, as evidenced by the concrete actions they are in the process of implementing.
Much of this had to do with physical risk assessment, with the report finding that 94 per cent of responding companies are carrying out site-specific assessments, which MSCI said demonstrates that climate-related risks are being treated as a priority.
Further to this, 76 per cent reported having implemented a framework to manage physical risks, with adoption highest among companies that have recently experienced extreme weather events - over 60 per cent of which said they are tying director and executive pay to the management of physical risks.
At the same time, a disconnect remained: 82 per cent of companies acknowledged that investing in climate resilience brings financial and reputational benefits - such as increased investor interest and lower insurance premiums - yet only one in five are actively pursuing revenue opportunities that help clients reduce physical climate risks.
This is despite broad agreement among companies, investors, and scientists that global temperatures are likely to rise in excess of 2.8 degrees this century, well above safe warming thresholds.
