Climate Finance at a Crossroads: What the Experts Say Comes Next

Climate finance spent ten years building its rulebook. The next ten years will show whether that rulebook actually moves money. That is the core argument of Climate Finance at a Crossroads, a new report from Amalgamated Bank that brings together views from more than a dozen leaders across banking, asset management, philanthropy and standard-setting.

The progress is real. Climate now sits in executive decision-making, financed-emissions targets are mainstream, and transition-finance frameworks shape how firms lend and invest. But as the report puts it, "progress is not the same as momentum." In the U.S., capital flows to climate solutions remain below what is needed, public investment has been scaled back, and clean-energy manufacturing has stalled. AI-driven power demand, geopolitical shocks and a spreading insurance crisis make the picture harder still.

The framing question has shifted. Institutions no longer need convincing that climate risk exists. The report asks "whether they can translate that recognition into disciplined action."

The numbers behind the moment

Clean energy now wins on cost and capital. The gap is between what the market can deliver and what the climate math demands.

The good news is economic: new utility-scale solar now comes in below new gas across most of its cost range. The bad news is physical: catastrophe losses keep rising, and the UN now says warming above 1.5°C is unavoidable.

What worked, and what is still stuck

The panel agreed that climate has become core financial decision-making, not a niche concern. Every major bank, asset manager and insurer now has a sustainability team. Regulators require transition-plan disclosure, and lenders such as BBVA have built client transition assessments into credit approval and risk appetite.

The bottleneck is no longer a shortage of solutions. It is getting capital to them at the right stage and on workable terms. Respondents named three recurring blockers:

• Policy uncertainty. Stable policy and carbon pricing matter more than new instruments, labels or taxonomies.
• Weak revenue models. Many projects lack dependable revenues or the scale to fit conventional risk-return expectations.
• Gaps between capital types. Nature, food systems, community and early-stage projects fall between philanthropy, public funding and mainstream investment.

The deeper barriers are structural. Markets reward quarterly performance while climate risk unfolds over decades. Consultants, index providers, proxy advisors and ratings agencies work under incentives that do not reward system resilience. As one respondent put it, the hardest barriers "are not mainly technological. They are institutional."

From measurement to action

Disclosure has improved a lot, but it rarely drives real-economy decisions yet. Respondents rated frameworks as "developing rather than mature." TCFD- and ISSB-style reporting is solid, but the link to financial statements, capex and lending decisions is still thin. Overlapping frameworks also impose outsized costs on smaller institutions and projects.

The most useful metrics show whether capital is changing the real economy:

• Where capital expenditure is going, and whether it matches the transition plan
• Credibility of transition plans, including asset retirement and technology deployment
• Absolute emissions reductions, not just portfolio intensity
• Exposure to physical climate risk

One respondent warned that over-emphasis on emissions-based targets "risks diverting focus from what is important in the near term." Firms should focus on execution, dependencies and financing needs.

Insurance came up repeatedly as both a mitigant and a source of risk. Shrinking coverage and rising premiums already affect asset values, so insurability now shapes bankability and investability. Several respondents want central banks and supervisors to publish common, science-based data on this kind of system-wide stress.

On what needs to change, the panel's answer was implementation over new commitments. Maria Lettini of US SIF observed that "the willingness to invest was never the constraint." Hundreds of gigawatts of committed capital sit in interconnection queues, while disclosure rules are rescinded and clean-energy tax credits sunset early. Finance can only shift the math at the margin. Policy on permitting, grids, procurement and carbon pricing has to do the rest.

Five priorities for the next decade

Amalgamated synthesized the panel's input into five recommendations:

1. Engage the policy environment. Political and regulatory conditions will shape whether finance can deliver climate goals, so institutions should support better policy.
2. Move from measurement to management. Use the tools already available to set priorities, deploy capital, manage risk and show accountable performance.
3. Make climate part of every financial decision. Bring it out of its silo and into strategy, underwriting, investment, risk and governance.
4. Lead through the headwinds. Short-term return pressure and political volatility will persist. Long-term value goes to firms that keep advancing anyway.
5. Leadership. Values-driven leaders are needed at every level, from the boardroom to the front line to policymakers.

The 2036 hindsight test

The panel was asked what we will realize, ten years from now, that we misunderstood in 2026. The consensus: the sector over-invested in measurement, portfolio alignment and signaling. It under-invested in real-economy systems, infrastructure and adaptation. As one panelist put it, diversified investors "cannot ultimately diversify away from the degradation of the systems that underpin the entire economy."

The report lists signs that the sector failed to learn. In 2036, it failed if we are still:

• Focused on portfolio alignment and analytics
• Relying on financial levers instead of backing real-economy policy
• Surprised by physical shocks and insurance stress arriving faster and costlier than expected
• Without solutions for the natural limits of insurance

The takeaway

The infrastructure is built. What matters now is execution: capital that reaches real projects, metrics that drive decisions, and a finance sector that backs the policy it depends on. Better reporting alone will not close the gap between $2.2 trillion flowing today and the 55% emissions cut needed by 2035.

For anyone working where finance meets decarbonization, the message is clear. The market will reward those who can show real-world outcomes, not just well-formatted disclosures.

Why this matters for carbon markets

At Zero Circle, we see the same shift in carbon markets. Buyers are moving past pledges and asking what their money actually delivered. The report's call to move "from measurement to management" applies directly: a carbon credit is only as valuable as the verified, real-world impact behind it.

That is why we focus on connecting companies with carbon offset projects whose impact can be traced, from India and Mexico to the U.S. and Denmark. Well-structured project data turns climate intent into capital that reaches real projects. The panel's point about gaps between philanthropy, public funding and investment capital is also where carbon markets can help. They create revenue streams for nature and community projects that conventional finance often misses.

The next decade of climate finance will be judged on outcomes. Carbon markets built on transparency and credible data are one of the most direct ways to deliver them.

Source

Amalgamated Bank, Climate Finance at a Crossroads (2026). Panelists include leaders from PCAF, Lloyds Banking Group, BBVA, Carbon Tracker, Kepos Capital, Cambridge Associates, Sierra Club Foundation, Nordea, UNEP FI, US SIF and others.