Sustainable investing is alive and well in the private markets
The 2026 edition of The State of Sustainable Investing in the Private Markets explores 13 trends across thematic climate investing, AI usage and sustainability, greenhushing, defense, regulations, DEI, Impact fund performance, and more. Despite a charged political environment and the proliferation of greenhushing, sustainable investing is proving far more durable in the private markets than public discourse might suggest. Rather than retreating, many fund managers are simply adapting—using less polarizing language and tailoring their messaging to different audiences, with a particular emphasis on financially material initiatives.
Meanwhile, private climate-investing fund AUM reached a new high of $1.5 trillion in 2025, driven primarily by energy transition infrastructure fundraising, with projections pointing to more than $2 trillion by decade’s end. Impact investing also defied the broader fundraising slowdown: After two consecutive years of declines, Impact fundraising more than doubled 2024 totals in 2025, buoyed by blockbuster infrastructure closes from firms such as Brookfield and Ardian. On the returns front, when controlling for strategy mix, Impact and non-Impact funds have delivered strikingly similar median excess returns across most vintage years—giving lie to the narrative that positive impact must come at a financial cost.
AI is emerging as a meaningful tool for sustainability-related data collection and analysis, lowering barriers for smaller managers and helping sustainability teams do more with leaner budgets. Plus, there are opportunities to reduce AI’s environmental impact via datacenter hardware and the architecture of the AI models themselves.
Private climate-investing fund AUM continues to climb, driven in large part by strong fundraising in energy transition infrastructure. Read about this trend and 12 others across ESG, Impact investing, DEI, thematic investing, and more in the latest installment of our series The State of Sustainable Investing in the Private Markets.
Article by: Anikka Villegas | Hilary Wiek, CFA, CAIA – View original article
