Climate-themed exchange-traded funds totaled approximately $625 billion as of September 2025, following nearly 12% growth in just the first nine months of the year, according to the latest quarterly report from the MSCI Sustainability Institute.
Quarterly results show that Europe and Asia continue to lead, increasing their share in these assets and gaining around 15 percentage points since the beginning of the year, at the expense of the United States’ dominance.
In the case of private climate capital funds, a substantial portion (40%) is invested in the utilities sector—a high-emission sector—compared to just about 8% in public funds.
These figures reflect that transition financing is growing and diversifying, though still concentrated in certain regions and sectors.
Reducing Emissions Without Losing Economic Growth
Between 2015 and 2023, publicly listed companies in developed markets grew revenues by approximately 49%, while their emissions decreased by nearly 25%. This demonstrates that it is possible to reduce emissions while generating economic growth—at least in some markets—reinforcing the notion that a low-carbon transition can be compatible with development.
Emission-intensive sectors face more difficult trajectories: companies in energy, materials, and consumer discretionary have temperature rise projections well above the average.
China stands out for both its high fossil fuel consumption and its leadership in clean technology innovation (in terms of both quantity and quality of patents).
Power grids and generation systems show significant variation across countries. For example, the U.S. has a relatively higher share of electricity generation from low-carbon sources compared to other major emitters.
Growing Corporate Ambition, But Still Insufficient
By the end of the third quarter of 2025, around 21% of publicly listed companies had set a climate target validated by the Science Based Targets initiative (SBTi). However, only about 12% of companies are aligned with a pathway compatible with limiting global warming to 1.5°C above pre-industrial levels.
The majority (approximately 61%) are projecting trajectories that exceed a 2°C temperature rise, and nearly one-quarter could surpass 3.2°C. This indicates that, although ambition is increasing, the gap between targets and actual trajectories remains significant.
Physical Climate Risks and Corporate Exposure
Companies could face losses from physical damage and missed opportunities worth approximately $1.3 trillion in the coming year due to climate-related physical risks (such as floods, heatwaves, wildfires, and storms).
Corporate headquarters located in cities such as Miami, New York, São Paulo, Osaka, Riyadh, and Pune are among the most globally exposed to extreme climate risks.
Market mechanisms (such as emissions trading), standardized metrics, and transparency will be key to channeling capital where it is most needed and enabling markets to accurately price risks and opportunities.
