RAO Global Newsletter – September 2025

From Global Shifts to European Realities: Why RAOEurope25 Matters More Than Ever

A World in Flux, A Region at the CrossroadsAs the financial community prepares to gather for RAO Europe 2025 (21 October, London), one reality is undeniable: global investment flows are being reshaped by geopolitics, climate imperatives, and technological disruption at a pace we’ve never seen before.

Capital is not just chasing returns — it’s being tested against a new mandate: resilience, responsibility, and real-world outcomes. Investors, asset owners, and policymakers are caught between competing forces: the pressure to decarbonise portfolios, the need to hedge against geopolitical volatility, the opportunity (and risk) of AI, and the imperative to deliver a “just transition” that keeps societies intact.

Europe stands at the epicentre of this tension. As the EU and UK tighten regulatory frameworks, while global capital markets fragment and realign, the region finds itself both vulnerable and uniquely positioned to lead.

RAOEurope25 offers not just another stage for dialogue, but a crucible for collaboration. Below, we explore how the agenda topics reflect key global developments — and why this year’s conversations will be decisive for shaping Europe’s investment future.

1. Geopolitics & Portfolio Resilience: Navigating a Fragmented World

Global view:
The last five years have seen geopolitical risk re-priced into portfolios like never before. The US-China rivalry continues to define trade and technology supply chains, while Russia’s actions in Eastern Europe and ongoing instability in the Middle East add further complexity. Sanctions regimes, export controls, and the rise of “friend-shoring” have disrupted flows of energy, commodities, and semiconductors.

European reality:
For European investors, the challenge is acute: supply chain resilience is no longer theoretical. Energy dependence on Russia exposed vulnerabilities, while efforts to diversify toward renewables and LNG reshaped the investment landscape. Strategic autonomy has become a policy mantra in Brussels, but for asset managers it means grappling with higher costs, increased due diligence, and sector-specific volatility.

Opportunities:

• Investing in European supply chain “winners” (semiconductors, renewables, logistics hubs).

• Hedging geopolitical risk with diversified private market exposure.

• Leveraging Europe’s regulatory clarity (CSRD, SFDR) to attract global capital seeking stability.

At RAO Europe, expect David Craig (TNFD) and others to unpack how governance, stewardship, and scenario planning can help investors turn geopolitics from an existential risk into a strategic advantage.

2. Climate & Capital: Accelerating Decarbonisation in a Volatile Economy

Global view:
The world is off track for 1.5°C. Yet capital flows into climate-related investments continue to surge, with the IEA reporting that clean energy investment now outpaces fossil fuel investment 2:1. Transition finance — once a buzzword — is now a core portfolio consideration, with blended finance and sovereign transition bonds gaining traction.

European reality:
Europe has led on setting net-zero targets, but implementation is messy. Carbon pricing under the EU ETS is biting harder, while debates rage around nuclear, hydrogen, and carbon capture. The macro backdrop — inflationary pressures, rising rates, and fiscal tightening — complicates the scale-up of transition finance.

Challenges:

• Stranded asset risk in utilities, heavy industry, and transport.

• Political pushback against green regulation (notably in some member states).

• Financing gaps for SMEs and mid-market firms transitioning supply chains.

Opportunities:

• Transition-linked loans and bonds.

• Private capital filling gaps in climate infrastructure.

• Europe as a testbed for climate-aligned investment frameworks that could scale globally.

At RAOEurope25, the Climate & Capital panel will spotlight how investors can move beyond targets to execution, balancing risk-adjusted returns with real-world decarbonisation outcomes.

3. Nature-Positive Finance: Investing in Biodiversity, Tackling Deforestation & Restoring Ecosystems

Global view:
Biodiversity is climbing the investor agenda, with TNFD (Taskforce on Nature-related Financial Disclosures) launching its recommendations and the EU’s EUDR (Deforestation Regulation) forcing companies to prove supply chains are free of deforestation-linked commodities. Global estimates suggest that $44 trillion of economic value depends on nature, making biodiversity a systemic risk.

European reality:
For European investors, compliance with TNFD and EUDR is not optional — it’s a board-level issue. Asset owners are asking managers for strategies that integrate natural capital. Yet data gaps remain, and investment products addressing biodiversity are still in early stages.

Challenges:

• Integrating biodiversity metrics into mainstream investment decisions.

• Limited liquidity in nature-positive funds and projects.

• Balancing investor appetite with credible impact measurement.

Opportunities:

• Growth in sustainable forestry and regenerative agriculture funds.

• Satellite data and AI to monitor ecosystems (enter players like Josh Gilbert, Sust Global/ISS STOXX).

• Europe leading on biodiversity finance standards, shaping global capital flows.

At RAOEurope25, Clara Barby (Just Climate) and peers will examine how investors can move from rhetoric to investable pathways that value and restore ecosystems.

4. Impact Investing: Measuring Real-World Outcomes Beyond Financial Returns

Global view:
Impact investing has moved mainstream. Global AUM in impact strategies exceeded $1 trillion, but credibility remains under fire. Investors face scrutiny over “impact-washing” — ambitious claims with little measurement rigor.

European reality:
Europe remains a hub for Impact Measurement & Management (IMM) innovation, with initiatives from the Impact Management Project to EU taxonomy alignment. Yet the pressure is on asset managers to standardise metrics and demonstrate causality between investments and outcomes.

Challenges:

• Balancing financial performance with measurable impact.

• Limited comparability across frameworks (SDGs, IRIS+, EU standards).

• Rising demand from pension funds and retail investors for authentic impact.

Opportunities:

• Scaling impact through listed assets (not just private equity).

• New products in affordable housing, health tech, and urban regeneration.

• Europe exporting its IMM frameworks globally.

At RAOEurope25, the Impact Investing panel will share case studies on scaling real-world outcomes, making it clear that impact ≠ concessionary returns.

5. The “S” Factor: Human Capital, Social Equity & Just Transition Investing

Global view:
Social issues are under a global spotlight. From supply chain labour abuses to diversity & inclusion, the “S” in ESG is now linked directly to investment risk and opportunity. Regulators are codifying expectations: the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) mandates human rights due diligence across supply chains.

European reality:
Investors must now demonstrate not only climate alignment but also just transition strategies: ensuring workers and communities are not left behind in the green shift. Union activism, litigation risk, and reputational pressure all weigh heavily.

Challenges:

• Measuring “S” factors consistently across public and private markets.

• Political sensitivity around DEI in some jurisdictions.

• Rising compliance costs.

Opportunities:

• Leadership through robust human rights due diligence.

• Integrating workforce equity into transition finance products.

• Differentiation: asset managers who can authentically demonstrate “S” integration will attract mandates.

The “S Factor” session at RAO Europe will unpack how Naomi Clark (USS) and others are embedding social equity into portfolios, ensuring the transition is fair as well as fast.

6. Data & AI Revolution: Enhancing ESG Insights & Investment Decisions

Global view:
The AI revolution is sweeping finance. From satellite monitoring of emissions to natural language processing of corporate reports, AI is bridging the ESG data gap. Yet it also introduces bias, opacity, and governance challenges. Regulators (including the EU’s AI Act) are moving fast to establish guardrails.

European reality:
Europe leads globally on AI regulation, but investors must reconcile compliance with innovation. ESG analytics firms are racing to scale — exemplified by ISS STOXX’s acquisition of Sust Global, bringing geospatial climate risk analysis into mainstream ESG workflows.

Challenges:

• Avoiding “black box” ESG ratings.

• Managing ethical risks in AI deployment.

• Integrating disparate datasets into decision-making.

Opportunities:

• Harnessing AI for climate risk modelling, supply chain monitoring, and impact measurement.

• New alpha generation opportunities via data-driven ESG insights.

• Europe exporting AI governance standards globally.

Expect this keynote with Haim Israel to highlight how AI is both a risk multiplier and a risk mitigator — depending on how investors use it.

7. Stewardship & Influence: Driving Systemic Change Through Active Ownership

Global view:
Stewardship is maturing. Investors are moving beyond proxy voting toward active engagement with companies on climate, biodiversity, labour, and governance. Collective initiatives like Climate Action 100+ demonstrate the power of coalition.

European reality:
European asset owners are leading in stewardship, with regulators expecting demonstrable outcomes from engagement. Yet scepticism remains about the effectiveness of dialogue versus divestment.

Challenges:

• Measuring the tangible impact of engagement.

• Avoiding accusations of “box-ticking” stewardship.

• Scaling collective action without diluting accountability.

Opportunities:

• Stewardship as a differentiator in manager selection.

• Embedding stewardship into private market strategies.

• Expanding influence into emerging markets.

At RAOEurope25, Mark Hill (TPR) and others will debate how stewardship can drive systemic change in practice — not just in annual reports.

Conclusion: Why RAO Europe 2025 Is the Don’t-Miss Moment

The global currents of investment and divestment are converging on Europe’s shores. Whether it’s the geopolitics of supply chains, the acceleration of decarbonisation, the valuation of nature, or the disruptive potential of AI, the challenges are urgent and interconnected.

For asset owners, managers, and service providers, the opportunities are equally clear: to differentiate by engaging, collaborating, and leading.

RAO Europe 2025 is not just another ESG conference — it’s the place where:

• Geopolitical uncertainty meets portfolio strategy.

• Climate targets meet capital flows.

• Social equity meets fiduciary duty.

• Technology disruption meets ethical governance.

The stakes are high, the timelines short, and the expectations from clients, regulators, and society relentless. Those who show up — to share, listen, and collaborate — will not just manage the risks, but help define the future of responsible investment in Europe and beyond.

👉 Join us on 21 October in London — because in a fragmented, volatile world, conversations and collaborations are the only real currency of resilience.