Explore this subject further: Which stakeholder expectations affect your business?.
Investors have different interests in a business. Existing shareholders want to understand the outlook for earnings and returns. Prospective investors assess whether future opportunities justify the capital and risks involved. Lenders consider the capacity to service debt and the value of assets supporting their lending.
Climate-related changes can influence all three perspectives. Physical risks may affect operations, assets and insurance costs. Changes in technology, markets, regulation and customer requirements can alter competitive advantage, investment needs and future earnings.
For boards and management teams, the challenge is to explain how climate related changes could affect enterprise value, the responses that are worth pursuing and the financial proposals that underpin delivery.
The question for leaders is how their climate strategy sustains and strengthens the investment case for the business.
The Investor Group on Climate Change (IGCC) surveyed 55 institutional investors for its State of Net Zero Investment 2026 report. Participating investors reported substantial interest in climate-related investment opportunities, alongside barriers to deploying capital.
Their responses illustrate an important distinction: interest in a sector or technology does not mean that every project or company operating in that sector will attract investment.
Investors are backing the transition, but need attractive returns and policy certainty
“Investors see that the move to net zero is happening, but Australia can’t take their capital for granted.”
The findings suggest that capital availability and investability are different questions. Even where investors recognise an attractive market opportunity, they need confidence in the expected returns, risks and conditions on which delivery depends.
For an individual business, the task is to show how its strategy and capabilities can turn a changing market into sustainable earnings and returns.
Investor expectations become more tangible when leaders consider how climate-related changes could affect the value and performance of their own business.
Southern Cross Commercial Finance
This fictional Australian non-bank lender provides finance to commercial customers. Its enterprise value depends on the quality of its lending portfolio, interest margins, funding costs, customer relationships and its capacity to manage credit risk. Climate-related changes could affect borrowers' capacity to repay, the value of assets securing loans and demand for finance to support business investment.
Rebecca Chen — Chief Executive Officer
Rebecca sees opportunities to finance customers investing in more efficient equipment, resilient facilities and new technologies. But growing demand does not necessarily establish that new lending will produce attractive risk-adjusted returns.
Leadership question: Which changing customer investment needs could support profitable growth while maintaining the quality of our lending portfolio?
Thomas Murray — Chief Financial Officer
Thomas needs to understand how changing borrower risks, funding costs and capital requirements could affect profitability and the capacity to finance growth.
Leadership question: What financial information and demonstrated performance would give our investors and funding partners confidence in our portfolio quality, financial resilience and investment plans?
Rebecca and Thomas are considering complementary aspects of the same strategy. New lending opportunities could strengthen enterprise value, provided the business can assess the risks, price them appropriately and secure the capital needed to deliver.
What gives investors confidence in your climate strategy?
Investors need to see how the business intends to sustain performance, manage changing conditions and allocate capital.
Five questions can help leaders assess the strength of their investment narrative.
- Earnings and growth: Which sources of revenue and margin could strengthen or weaken?
- Assets and operations: How could climate-related changes affect asset productivity, costs and service reliability?
- Capital allocation: Which responses warrant investment, and how will their value be assessed?
- Financial flexibility: Can the business finance its responses while maintaining resilience and meeting existing commitments?
- Investment confidence: What assumptions, company results and performance measures support the strategy?
Australia's climate-related financial disclosure requirements provide a more consistent basis for explaining how climate-related risks and opportunities could affect a company's prospects. But compliance with disclosure requirements does not, by itself, establish the commercial value of a proposed response.
Leaders also need to understand what their own shareholders, prospective investors and lenders consider material to their decisions. Their interests may overlap, but they are not necessarily identical.
At Sightlines Advisory, we use the Climate Value Framework to connect climate-related risks and opportunities with the sources of enterprise value. Beginning with the company's business model and value drivers, the approach considers enterprise evidence, potential financial consequences and the relative value of possible responses. This helps leaders develop investment propositions that can be assessed alongside other business priorities, while strengthening the evidence available for investor engagement and climate-related financial disclosures.
For your next discussion with investors or lenders, consider which assumptions about your company's future performance are most important to their decisions.
Are those assumptions supported by financial records and operating results? How could changing climate conditions affect them? And which strategic responses could strengthen confidence in the company's future value?
Leaders demonstrate that they understand the conditions affecting enterprise value and are making informed decisions about how to respond.
Source note: References and quotations are retained in the article text. Verify original publications, figures and any reuse permissions before public release.