It is no secret that the transition finance landscape has become a rockier terrain to navigate over the last 18 months. The re-election of Donald Trump in the US has seen climate change crash down the domestic agenda, and this has had an impact on the international stage as well.
Since resuming his seat in the White House, the president has overseen the US’s second withdrawal from the Paris agreement, dismantled the landmark 2022 Inflation Reduction Act, reversed countless energy and environmental regulations, and urged the country to increase oil production under the mantra ‘drill, baby, drill’. The culture of climate hostility fostered by the US administration has inevitably affected the appetite of financial institutions globally for pursuing the transition. Banks, asset managers and financial services providers alike have scaled back their sustainability efforts, lest they lose business with the world’s largest economy.
This has been disappointing, but not surprising. However, as OMFIF’s Transition Finance Working Group has found, many financial institutions are staying the course. Pension funds, sovereign funds, ratings agencies and multilateral development banks – institutions that are focused on the long term as well as the immediate political environment – remain convinced of the need to fund the transition to a sustainable global economy. As such, climate-focused investors are starting to look elsewhere.
Emerging markets are set to benefit most from this shift. Asia Pacific, and especially China, is leading the way on renewable energy technology and electric vehicle manufacturing. Latin America is achieving impressive results in sustainable bond issuance. The Middle East is facing the need to transition its dependence on oil, particularly against the backdrop of war and trade volatility. And Africa, with its rapidly growing populations and deepening capital markets, is brimming with potential for new infrastructure projects, especially in energy and transport.
The June 2026 edition of OMFIF’s Sustainable Policy Institute Journal examines the opportunities that are being created by these changing tides in sustainability. It looks at the inducements for investors to enter these markets, as well as the opportunities for the regions being considered.
Cecily Liu from the London Stock Exchange Group discusses the shifts that are underway in climate investing, explaining that the focus is starting to move from green finance to transition finance. As many emerging markets are heavily dependent on fossil fuels for energy, transport and much of daily life, this creates significant opportunities for investors. Jane Waiyaki from WWF examines how the need for transition is converging with nature and biodiversity loss in emerging markets, which is forcing a rethink of how capital is being deployed.
Rebecca Karnowitz from Moody’s Ratings explores how Asia Pacific is building on the development of new taxonomies to spur investment in the region. Zongyuan Zoe Liu of the Council on Foreign Relations explains how China’s decarbonisation and renewable energy will be central to the country’s goal of internationalising the renminbi. Meanwhile, Arunima Sharan, Saumya Malhotra and Joseph Feyertag from the London School of Economics and Political Science show that India is increasingly becoming an attractive destination for climate-aligned foreign capital.
Nana Maidugu from the Nigeria Sovereign Investment Authority writes about the reset in global climate investment and explains how countries like Nigeria have an opportunity to lead in this next phase. Similarly, OMFIF’s Yara Aziz looks at the potential for the Middle East and North Africa to take advantage of investors’ pivot away from the US and Europe, and focuses on why Morocco stands out as a destination for this capital.
Andrea Correa from OMFIF takes a big-picture view of the importance of robust fiscal frameworks for emerging markets as they transition. Focusing on Latin America, she explains why green taxonomies have been so crucial to the region’s success in sustainable bond issuance. Finally, Jonathon Smith from Sustainable Fitch discusses the increasingly important role of labelled debt instruments in mobilising capital for transition projects in emerging markets.
As OMFIF’s Anne Simpson says in the cover story, it’s important to look beyond the pessimistic headlines about climate rollbacks and regulatory slashes coming from the US. While the transition has taken a knock, many investors and countries remain committed to the work of financing a more sustainable future. With their innovation, persistence and ambition, emerging markets are leading the way to a greener world.
In September, OMFIF is partnering with Bolsa Institucional de Valores in Mexico City for the Americas transition finance summit. Building on the themes explored in this journal, the event will bring together investors, asset managers, corporates and policy-makers to discuss the opportunities presented by the green transition across the region.
Sarah Moloney is Editorial Director at OMFIF.
Interested in this topic? Subscribe to OMFIF’s newsletter for more.