Europe’s Climate VCs Shift Focus to Infrastructure Investments in 2025

Europe’s Climate VCs to Focus on Infrastructure Over Impact in 2025.

After years dominated by impact investments, leading climate funds are shifting their focus to robust infrastructure solutions. Why? The market is maturing: scalable technologies and political support programs—such as Germany’s €500 billion infrastructure fund—are creating new opportunities. At the same time, expectations are rising for companies to implement long-term, measurable climate strategies. This shift is also reflected in the broader European venture capital landscape, where experts note that infrastructure investments are seen as the next logical step to drive decarbonization at scale and to meet the EU’s ambitious climate targets. According to a recent analysis, the transition is not just about capital allocation but about building the backbone for a sustainable economy, with VCs seeking projects that combine resilience, scalability, and measurable impact (source).

What You Need to Know:

• Market Trends: VC investments in Germany rose to over €7 billion in 2024, while early-stage deals and experimental projects are losing significance. This mirrors a wider European trend, with total climate tech VC funding in Europe surpassing $20 billion in 2024, as reported by Sifted.
• Policy & Support: The EU and Germany are mobilizing billions for infrastructure projects to drive energy, mobility, and industrial decarbonization. The European Green Deal and NextGenerationEU recovery plan are key drivers, allocating hundreds of billions to sustainable infrastructure (source).
• New Priorities: Funds like World Fund and 2150 are betting on scalable technologies in energy, agriculture, and mobility, focusing on sectors with the highest potential for emissions reduction and system-level transformation (source).
• Opportunities for Companies: Investments in networks, storage, and the circular economy are in demand. ESG strategies must deliver clearly measurable results to attract VCs. Companies that can demonstrate robust, data-driven ESG outcomes are increasingly favored by institutional investors (source).

You now have the chance to adapt your investment strategies and benefit from this shift. Infrastructure is the future—be ready.

Building Climate and Digital Infrastructure Together | 2025 From Billions to Trillions Summit

What’s Driving the Shift to Infrastructure Investments?

The trend toward infrastructure investments is being propelled by three key forces: changing political frameworks, the growing need for large-scale climate solutions, and closer collaboration between governments and the private sector. Recent research highlights that as climate tech matures, investors are seeking projects with proven business models and the potential for system-wide impact, rather than early-stage, high-risk ventures (source).

Political and Regulatory Changes

One example of political change is Germany’s €500 billion infrastructure fund, which earmarks €100 billion specifically for climate-related measures. At the same time, the EU is mobilizing over €100 billion through its Clean Industrial Deal to strengthen industrial competitiveness and advance decarbonization. Learn more about CSDDD and compliance. The European Green Deal and the REPowerEU plan are also accelerating investments in renewable energy, grid upgrades, and green hydrogen infrastructure (source).

In the UK, Ofgem introduced the “Target Model Option 4+” in April 2025, prioritizing a “first ready and needed, first connected” approach. This new model favors projects that are both feasible and strategically relevant, aiming to increase Gate-2 project capacity from 39 GW to 65 GW.

In Germany, the government plans to abolish the Supply Chain Due Diligence Act and align with the EU Sustainability Directive. The goal is to simplify compliance processes for internationally active companies while promoting both technical and market-driven solutions. Explore the EU Deforestation Regulation and sustainability benefits.

Market Demand for Large-Scale Climate Solutions

Energy demand in the US is expected to rise by 2.4% annually by the end of the decade. At the same time, data centers’ share of total energy consumption is projected to grow from 3% to 8% by 2030, with artificial intelligence accounting for about 20% of data center energy use. Read about AI energy demand and sustainable data centers. In Europe, the electrification of transport and industry is driving unprecedented demand for grid expansion and energy storage, with the International Energy Agency (IEA) estimating that annual investment in grids must double by 2030 to meet climate goals (source).

These developments are driving demand for clean energy, innovative storage solutions, and modern grid technologies. Infrastructure projects are especially popular with investors because they are seen as lower risk. However, there is a funding gap in the $45–100 million range, often referred to as the “missing middle within the missing middle.”

The circular economy is also gaining importance: currently, only 7% of materials used are recycled, while around 120 million tons of landfill capacity could disappear by 2030. To achieve net-zero goals, the circular economy would need to contribute up to 45% of global carbon emissions reduction (source).

Public-Private Partnerships

In addition to market-driven factors, partnership models play a central role. Public-Private Partnerships (PPPs) have proven to be an effective mechanism for mobilizing private investment. Estimates suggest that around $6.9 trillion per year is needed to implement infrastructure projects in line with sustainability goals and the Paris Agreement. World Bank on PPPs and climate finance. The European Investment Bank (EIB) has also scaled up its support for PPPs, particularly in renewable energy and sustainable transport, to bridge the infrastructure investment gap (source).

In developing countries—which must spend 4.5% of GDP annually on infrastructure and face a global deficit of $15 trillion—PPPs offer a practical solution. They enable balanced risk-sharing between public and private actors and ensure long-term stability throughout the project lifecycle.

The World Bank highlights:

“Tackling climate change is key to World Bank mission of reducing poverty and boosting shared prosperity. Private sector engagement and investment is needed to finance the green transition and strengthen resilience to climate change. PPPs can help maximize limited public resources by helping governments mobilize private capital, expertise, and innovation, and unlocking climate finance.”

A practical example of successful PPPs is provided by the Inter-American Development Bank (IDB) in Jamaica. In May 2020, the IDB published a report on Jamaica’s PPP policy and projects, outlining measures to better integrate climate resilience goals. Additionally, funding for clean energy rose by 12% to $9.4 billion in 2024, even though 69% of respondents expect capital for first-of-a-kind plants to decline by 2026.

Taken together, these political, market, and partnership developments show how Climate VCs are increasingly aligning with stable, future-proof infrastructure solutions.

How Leading Climate VC Funds Are Changing Their Approach

Given the changes in the market and regulatory environment, leading funds are demonstrating how they are transitioning from purely impact-focused projects to infrastructure-oriented investments. This realignment is especially visible among European Climate VCs, who are adapting their strategies and focusing on three core areas: new infrastructure sectors, changes in funding stages, and the strategic advantages of infrastructure projects. According to Sifted, this shift is also a response to the growing demand from limited partners (LPs) for more predictable returns and tangible climate outcomes.

New Infrastructure Investment Targets

Berlin-based World Fund is a pioneer in this shift, focusing on scalable companies with the potential to significantly reduce emissions. The fund targets five key sectors: energy, food and agriculture, manufacturing, buildings, and mobility—areas identified as having the greatest leverage for climate protection. Discover what climate VCs are looking for beyond 2025.

Similarly, Planet First Partners, with offices in Luxembourg and London, invests in high-growth companies advancing sustainable technologies in green cities, energy transition, Industry 4.0, and farm-to-fork systems. The goal is to scale proven products in sectors like renewable energy, sustainable food systems, and cleaner industrial production.

Market data supports this infrastructure focus: in the EU, 53% of all venture and growth equity investments go to energy and power supply (source).

Another example is Nysnø from Norway, a state-backed climate investor. Since 2025, Nysnø has focused on profitable, scalable solutions that reduce greenhouse gas emissions. With a long-term perspective and co-investments with private capital, the company helps de-risk early climate ventures.

Changes in Funding Stage Approaches

This shift in funding approaches is clear in current market data: early-stage deal volume dropped by 33% (from 142 to 130 deals), while Series B and growth equity deals fell by 43%. At the same time, the average deal size in the EU remained steady at around €12–13 million. These figures highlight a strategic shift—toward fewer, but more capital-intensive, infrastructure projects. This trend is echoed in the US, where climate infrastructure funds like Generate Capital and Breakthrough Energy are increasing their focus on later-stage and project finance deals (source).

One example is 2150, a cleantech VC that raised nearly €200 million for its second fund in March 2025. The focus is on solutions for urban environments, making cities more efficient, resilient, and sustainable. Notably, the fund concentrates on Series A financings, underscoring the move toward later-stage, proven technologies. See case study on Konfidens.

Another example is EcoDataCenter from Sweden. In March 2025, the company raised €450 million in growth equity to expand its sustainable data center operations. This investment shows how funds are putting larger sums into proven technologies instead of spreading smaller amounts across many early-stage projects.

Advantages of Infrastructure-Oriented Investment Strategies

Industry experts highlight the benefits of infrastructure-oriented strategies. Jan Lozek, founder and managing partner of Future Energy Ventures (FEV), explains:

“This is not just about hitting climate targets—it’s about reshaping the entire energy landscape.”

This statement underscores that infrastructure investments not only support climate goals but also enable fundamental changes in the energy sector.

The strategic advantages are many. Infrastructure projects offer longer investment horizons and more stable returns, making them especially attractive to institutional investors. For example, Shift4Good, a global impact investment fund based in Paris, closed its first fund at €220 million in January 2025. The fund focuses on transformative startups in rail, road, air, and sea transport.

Another advantage is the ability to mobilize larger amounts of capital. While impact investments are often limited to smaller sums, infrastructure projects attract investors managing hundreds of millions of euros. This explains why global investments in clean energy are now twice as high as those in fossil fuels. Global clean energy investments surpass fossil fuels. According to the International Energy Agency, global clean energy investment is set to reach $2 trillion in 2024, compared to $1 trillion for fossil fuels (source).

In addition, infrastructure projects offer clear, measurable results. Metrics such as energy capacity, CO₂ reductions, or the number of households served make it easier for investors to track their ESG goals while achieving attractive returns.

These strategic adjustments lay the foundation for practical tools and methods in ESG planning.

Tools and Methods for ESG and Climate Tech Planning

For the infrastructure projects that Climate VCs are focusing on, precise planning tools are essential. Companies must systematically adapt their ESG strategies. Three core areas are in focus: specialized ESG assessment, regulatory frameworks, and data-driven measurement methods. Below, we look at how these approaches are put into practice.

ESG Planning and Assessment Tools

Assessing ESG risks in infrastructure projects requires detailed analysis of physical, transition, and liability risks. Companies are increasingly relying on specialized data management platforms (DMPs) that enable efficient ESG reporting through automated validation and AI-powered analytics. Learn about AI tools for climate risk analysis. According to a 2023 study in Nature Climate Change, AI-driven ESG analytics are improving the accuracy and speed of climate risk assessments, helping investors make better-informed decisions (source).

An effective approach combines qualitative initial assessments with quantitative scenario analyses. These hybrid methods offer the flexibility and precision to refine strategies step by step.

An important tool in this area is the FAST-Infra Label. It provides a global framework for assessing and certifying infrastructure projects, helping investors identify resilient and low-emission solutions. Constantin Cotzias, European Director at Bloomberg L.P., emphasizes:

“Building a common language for quantifying and assessing performance is essential to enabling investors to understand the viability of sustainable infrastructure projects. That’s where the FAST-Infra Label comes in, building confidence in sustainable infrastructure investment through a commonly accepted, consistent global framework of high-quality data across asset types.”

The label was developed through collaboration among over 200 organizations in the infrastructure investment sector over three years. Complementing this, the GRESB Infrastructure Asset Assessment provides a basis for systematic reporting, objective evaluation, and peer benchmarking of infrastructure assets’ ESG performance.

Compliance Frameworks for Investment Alignment

Regulatory frameworks play a central role in aligning investments. In Europe, the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy Regulation form the basis for sustainable finance. These guidelines help align investments with climate goals for infrastructure projects. Read a complete overview of ESRS standards and CSRD reporting. The EU’s Sustainable Finance Disclosure Regulation (SFDR) further requires asset managers to disclose how their investments align with environmental objectives, making transparent ESG reporting a competitive advantage (source).

The EU Omnibus ESG Regulation simplifies and harmonizes these rules by reducing reporting obligations by 25% without sacrificing content. The European Financial Reporting Advisory Group (EFRAG) has defined nearly 800 data points with its Implementation Guidance (IG) 3 to improve sustainability reporting accuracy.

Companies should familiarize themselves early with the requirements of CSRD, CSDDD, and the EU Taxonomy, as their integration under the Omnibus Framework will significantly impact compliance processes. Using digital tools, including AI, can also reduce administrative challenges and increase reporting accuracy.

Data-Driven Impact Assessment Methods

Cloud platforms that treat ESG data as consistent products are crucial for ensuring scalability, flexibility, and security. An IBM analysis shows that by 2023, 98.6% of S&P 500 companies were already publishing sustainability reports. The trend is similar in Europe, where 86% of large companies now issue annual ESG disclosures (source).

Case in point: A leading asset management company needed to consolidate ESG data of varying quality from different sources to enable comprehensive CO₂ emissions tracking. Using a cloud-based platform, emissions from managed assets across business units were captured. Within six months, the platform was fully integrated, and 90% of assets were monitored.

A robust data governance framework is essential to ensure the accuracy, integrity, and transparency of ESG data. At the same time, sound data analysis enables actionable insights from raw ESG data. With these methods, companies can strategically adapt their approaches to meet the new requirements of infrastructure-focused investments.

Aligning Corporate ESG Strategy with VC Requirements

The increased focus of Climate VCs on infrastructure investments means companies must rethink their ESG strategies. Forecasts suggest that institutional ESG investments will account for more than 20% of managed capital by 2026, reaching $33.9 trillion. This presents companies with the opportunity to strategically advance their approaches. According to Morningstar, the global ESG fund market is expected to rebound and grow steadily as regulatory clarity and investor demand increase.

Steps to Update Your ESG Strategy

Companies that want to remain successful should view regulatory changes as an opportunity to modernize their sustainable finance approaches. Initial steps include reviewing fund names, adapting to SFDR categories, and expanding capacity to comply with CSRD and IFRS requirements. Learn about IFRS impact on power purchase agreements. The IFRS Foundation’s new climate disclosure standards are expected to become the global baseline for sustainability reporting, making early adoption a strategic advantage (source).

It’s also important to improve ESG frameworks, actively engage stakeholders, and invest in modern reporting technologies. Integrating ESG aspects into existing financial reporting processes and fostering cross-functional teams from finance, legal, and ESG are key. Equally crucial is enhancing due diligence processes to better manage supply chain risks.

Case in point: Germany’s €500 billion infrastructure fund has earmarked €100 billion for climate-related measures. This creates enormous opportunities for public-private partnerships, especially in grid and battery infrastructure. With an updated ESG framework, companies can seize such opportunities and better align with Climate VC requirements.

Working with Climate VC Firms

To collaborate effectively with Climate VCs, a deep understanding of their new investment criteria is essential. According to a survey, 79% of investors consider a company’s handling of ESG risks crucial to their investment decisions. In addition, 82% see sustainability as a fixed part of corporate strategy (source).

Companies should therefore revise their communication strategies and highlight concrete projects that deliver measurable results in areas such as energy infrastructure, transport, or water systems. Digital skills and transparent reporting can help position the company as an ESG leader. Collaboration should focus on joint infrastructure projects with clearly defined metrics and success indicators.

Measuring and Reporting Infrastructure ESG Results

Assessing ESG outcomes in the context of infrastructure investments requires specialized tools. Already, 86% of companies publish a sustainability report, while 89% of global investors want ESG performance to be evaluated using uniform standards. Explore ESG metrics, technologies, and compliance for 2025. The Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD) are among the most widely adopted frameworks for infrastructure ESG reporting (source).

Modern ESG software enables you to set baselines, develop relevant KPIs, measure progress, and communicate results transparently. Especially for infrastructure projects, metrics such as energy consumption, water use, and CO₂ emissions are critical. Notably, water consumption has risen by an average of 9% per year since 2015 (source).

The introduction of verifiable metrics helps companies overcome legal hurdles and strengthen the credibility of their ESG performance. By 2025, ESG-mandated assets are expected to account for about half of all professionally managed investments, reaching a volume of around $35 trillion (source).

Conclusion: Preparing for Infrastructure-Focused Climate VCs

The tools and strategies presented here make it clear that Climate VCs will increasingly invest in infrastructure projects in the future. For companies, this means fundamentally rethinking and realigning their ESG strategies to succeed in this environment.

A thoughtful and structured approach is essential. Leaders should critically review their ESG principles and derive clear, measurable goals. These goals must be translated into concrete action plans—with clearly defined responsibilities, fixed timelines, and targeted resource allocation. Continuous monitoring of ESG performance using KPIs, as well as open and transparent communication about progress, are crucial for gaining investor trust.

To work successfully with Climate VCs, it’s especially important to present infrastructure projects in energy, transport, and water systems with clearly measurable results. Integrating ESG criteria into existing financial reporting processes and leveraging modern reporting technologies can help build long-term, sustainable partnerships. With this approach, companies are well prepared to meet the demands of Climate VCs.

Given a global impact investing market estimated at $1.571 trillion (source), the urgency of this topic is clear. Companies that act early and adapt their ESG strategies will gain a decisive advantage in this new era of investing. Now is the right time to future-proof your ESG strategy and position yourself optimally for infrastructure-focused Climate VCs.

FAQs

Why Are Climate VCs Shifting Their Focus from Impact Investments to Infrastructure?

The Shift of Climate VCs Toward Infrastructure Projects

More and more Climate VCs are turning their attention to infrastructure projects—a clear sign of the central role that solid, future-proof infrastructure plays in a changing world. Forecasts show that investments in climate technologies could decline by 2025, while infrastructure projects are expected to attract more capital due to their scalability, lower risk profile, and alignment with government priorities (source). At the same time, measures that strengthen energy supply, increase infrastructure resilience, and support national climate strategies are coming to the fore.

This shift is no accident. It reflects the urgency of creating solutions that are not only environmentally sound but also ensure economic stability. Infrastructure projects often have broader reach and are more closely linked to political and societal goals—a decisive advantage when it comes to achieving long-term change.

How Do Political Guidelines in Germany Influence the Refocusing of Climate VCs on Infrastructure Investments?

Political frameworks have a major impact on the strategic direction of Climate Venture Capital (VC) firms in Germany. With legal targets such as climate neutrality by 2045, clear priorities are set that promote investment in sustainable infrastructure. The German government’s infrastructure fund and the EU’s Fit for 55 package are providing unprecedented levels of public funding and regulatory certainty, making infrastructure investments more attractive to VCs (source).

Government programs and subsidies play a decisive role. They specifically support projects in areas such as renewable energy, eco-friendly mobility, and green technologies. These initiatives not only provide financial incentives but also give VCs clear direction to align their portfolios more closely with infrastructure projects. This creates the opportunity to combine environmental and social goals (ESG) with economic growth.

How Can Companies Adapt Their ESG Strategies to Attract Climate VC Infrastructure Investments from 2025 Onward?

Strengthening ESG Strategies Through Sustainable Infrastructure

Companies can make their ESG strategies more effective by specifically targeting investments in sustainable infrastructure projects. Measures should address both climate mitigation and adaptation goals. Projects that ensure long-term resilience to climate risks play a central role here. Clear sustainability goals and transparent reporting are essential to make progress visible and build trust. According to PwC, investors are increasingly scrutinizing the credibility and transparency of ESG disclosures, and companies with robust, data-driven ESG strategies are more likely to attract capital.

In addition, innovative technologies and new business models can accelerate the transition to a low-carbon economy. Such approaches not only make companies more attractive to Climate VCs but also strengthen their position in a market increasingly focused on sustainability.