The State of Investing in Sustainability in 2026

Decarbonization is EBITDA. The language just took a while to catch up.‍

Decarbonization is not ESG. It is EBITDA. That was the sharpest consensus to emerge from a recent Terras member discussion with Terryn Lawrence, EVP and Chief Sustainability Officer at Rabobank, Robert H. Edwards Jr., Managing Director at Hamilton Clark Sustainable Capital, and moderator Marvin Rottenberg, Founder and CEO at Terras.
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When sustainability is grounded in earnings impact, it finds funding. When it is framed as ideology, it becomes a target.
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That target was hit hard in 2025. When the Inflation Reduction Act grants were canceled, investors in energy transition companies walked away. Capital stacks built on the assumption of government support collapsed. Tax credit assumptions baked into long-term plans became contested overnight. Offshore wind took a direct hit, with some major energy players redirecting capital away from the sector entirely. The effects were swift and hard to reverse.

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The instinct that decides the argument

The single most useful takeaway from the conversation was almost a throwaway line. If the first framing that comes to mind is environmental rather than financial, the argument will always be harder to make than it needs to be. The leaders gaining ground are not the ones with better value pitches. They are the ones whose first instinct is to focus on margin, risk, and total cost of ownership. The label on the door matters less than the language in the room.

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$2.3 trillion does not lie

What 2026 looks like is different. Global investment in the energy transition reached $2.3 trillion in the most recent period, outpacing investment in fossil fuels. Venture capital is recalibrating. The framing that has real traction now: climate is about molecules, not politics.
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Solar and wind are advancing on pure economics. Battery storage is gaining. Geothermal is moving, with three new US government funding opportunities issued in recent months, framed around critical minerals and energy dominance. Pakistan illustrates where the transition is actually running: upwards of 15 gigawatts of solar installed in recent years, twenty-one fewer LNG shipments. The evidence is already in the data.

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The reset was structural, not cosmetic

Across finance, sustainability has evolved. Years of work embedding sustainability across business operations are being reassessed and refined, with a sharper focus on what is decision-relevant for credit, underwriting, and capital allocation. Rather than being broadly unwound, sustainability data and capabilities are being reprioritized - expected to demonstrate clear links to financial performance. In that context, many sustainability functions are being asked to re-earn their seat at the table, this time in the language of risk, return, and margin.
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This shift is not a retreat. As evidence grows that a large share of economic activity depends on nature and ecosystem services, issues like soil health and water access are increasingly understood as material financial risks rather than value statements. The institutions that recognized this earliest are moving beyond parallel strategies: instead of sustainability sitting alongside the business, it is being integrated directly into how risk is assessed and value is created.

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Regenerative agriculture is a margin calculation now

Regenerative agriculture is increasingly being evaluated as a margin decision. The disruption of the Strait of Hormuz exposed how tightly farm economics are tied to global input markets, particularly fertilizers. With core input costs often consuming a large share of crop revenues, the case for lower-input systems is no longer purely environmental—it is financial.
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Lenders are starting to take note. Evidence is emerging that regenerative and mixed systems can maintain, and in some cases improve, productivity while reducing exposure to volatile input costs, though results remain highly context-dependent. At the same time, there is an unexpected policy tailwind in the United States: regenerative agriculture is now linked to the Make America Healthy Again (MAHA) agenda, connecting soil health, food quality, food security, and farm resilience in a way that broadens its appeal beyond traditional sustainability narratives.

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The capital that thinks in decades is winning

Tying sustainability KPIs to a meaningful share of variable pay across the business keeps the function accountable to the people who control capital. Institutions not beholden to quarterly results have a structural advantage in deploying it. Portfolios built for where markets will be in twenty years cannot be managed on a quarterly horizon.
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Water runs through all of it. The global data center buildout is making water a bipartisan priority in the US, with direct implications for credit risk, operational continuity, and license to operate. The organizations mapping water exposure now will be setting the terms in five years, not reacting to them.

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What Terras members are asking

Discussion in the Q&A focused on how circular economy models can deliver cost advantage rather than merely green parity, how family offices and the next generation of wealth holders are intersecting philanthropic and investment capital in agriculture and grid infrastructure, and how Europe’s defense spending shift is reshaping what financial institutions will and will not fund.
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The fleet electrification example grounded the EBITDA argument in practice. Operators commissioning large-scale EV charging infrastructure with solar and storage are doing so because diesel costs make it the rational choice. No sustainability argument required. A smarter grid is a cleaner grid, and the motivation is total cost of ownership, not ideology. It is the same logic applied throughout the rest of the discussion, expressed in terms of diesel savings rather than carbon metrics.

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Looking ahead

The throughline across the conversation was simple. The institutions and operators repricing sustainability in the language of margin and risk are gaining ground. The ones still treating it as a values argument are spending energy defending it. The Terras community will continue this conversation at Terras Tuscany, where many of the leaders shaping these decisions will be present.