Half of investors see energy and environment deals collapse amid sustainability risks

With marked policy shifts and regulatory uncertainty impacting the energy and environment sectors, many deals have fallen through – particularly when pertaining to sustainability companies. New data from S-RM shows that 53% of investors have seen an energy and environment infrastructure deal collapse in the past three years.

Since returning to power at the start of 2025, Donald Trump has regularly tried to undermine clean energy adoption. On a recent visit to Scotland, the US president once again bemoaned the wind turbines as “the ugliest you’ve ever seen”, while incorrectly arguing it was the most expensive form of energy generation (onshore wind is now one of the cheapest forms of new electricity in the US, with its 2023 levelised cost standing at approximately $33 per megawatt-hour, lower than fossil gas on $45, and coal at $70).

These comments have marked a wider shift in how governments go about supporting – or undermining – the sustainability segment. The US administration’s partial rollback of its prior focus on renewables has had a significant financial impact on many renewable energy investors and developers. Meanwhile, in Europe, the pushback from far-right figures, landowners and farmers has led to a stop-start approach to enacting flagship ESG legislation, which has also impacted portfolio companies’ bottom lines.

Amid this, S-RM has surveyed 150 global infrastructure investors, across emerging and developed markets in the infrastructure sector, including its four strategically important sub-sectors: transport and logistics, energy and environment, digital and telecoms, and social infrastructure. And the researchers found that the uncertainty in the space meant that 53% majority of investors reported that deals in the energy and environment infrastructure sector had collapsed, due to sustainability risks in the past three years.

Sustainability risks include rapid changes in sustainability regulations; operational disruption from climate events; permitting and licensing issues; and public and stakeholder pressure. Alongside the domestic policy shifts this includes, 40% of dealmakers in the segment also noted geopolitical risk, and 36% pointed to sanctions risks as exerting influence in the sector externally.

Geopolitical risk as defined by S-RM includes sudden changes in political leadership or governance; voided contracts; geopolitical and trade disruptions, including war, sanctions, and bilateral disputes. And amid escalating trade disputes, back-and-forth trade restrictions between the US and China sporadically disrupt access to critical minerals and components needed for electronics and military equipment in the energy sector, while US tariff posturing has disrupted commercial decision-making, and caused the collapse of some deals.

Looking ahead, most deal makers do not expect a rapid resolution to these issues. In fact, most anticipate the situation to sink deeper into crisis – something which may further impact on investments. With sustainability companies, including carbon storage technology firms, struggling to obtain enough funding to scale, this poses a major problem to net zero efforts around the world – which still hinge largely on private sector backing.

According to the investors polled by S-RM, only 28% expect sustainability risks to decrease in the coming three years. Meanwhile, 37% expect they will get worse. And similarly, 19% said geopolitical risks would decrease, but 33% expect worse is to come in the following period.

Offering advice on navigating the complex picture, Ian Massey, head of corporate intelligence for the EMEA region at S-RM, said, “Investors in energy and environment infrastructure are navigating a sector where sustainability risks are central to deal success. Resource management, regulatory compliance, and climate resilience are increasingly shaping whether deals go ahead, reflecting a broader shift toward responsible and resilient infrastructure investing. Investors who integrate sustainability considerations early in the deal process are better positioned to protect value and capitalise on opportunities in a sector that remains highly attractive over the long term.”