5 key insights from the white paper ‘Improved Financial Performance of Sustainable Infrastructure in the Context of Climate Change’

The Global Infrastructure Basel Foundation (GIB) recently published a white paper titled, Improved Financial Performance of Sustainable Infrastructure in the Context of Climate Change. The paper is co-authored by Ania Porucznik, Senior Project Manager, and Louis Downing, CEO at the Global Infrastructure Basel Foundation. With climate scenario analysis from Ortec Finance—led by Sophie Heald, Koen De Reus, and Tijmen Janssen—the paper quantifies how greater institutional investment in sustainable infrastructure could enhance financial performance across a range of climate futures.

1. Infrastructure forms the backbone of modern economies, yet investment in the sector continues to fall short of demand.

• By 2040, the global infrastructure financing gap is projected to hit $15 trillion. This gap reflects the shortfall between expected investment levels and the funding required to meet global infrastructure needs.
• Private capital is critical to closing this gap but institutional investors allocate an average of only 5% of their portfolios to infrastructure.

2. As infrastructure systems are increasingly exposed to climate hazards - from extreme weather to chronic risks such as sea-level rise - resilience is becoming a critical factor in asset valuation.

• Natural disasters caused $368 billion in losses in 2024 - only 40% of that was insured.
• Early integration of proactive resilience measures – during planning, design or refurbishment stages - can reduce losses and improve insurability.
• Resilience also supports service continuity, revenue stability and long-term value retention.

3. Within the next 15 years, sustainable infrastructure is expected to financially outperform conventional infrastructure by 10–20% under different climate scenarios.

• Under the Net Zero Market Disruption scenario, sustainable infrastructure is expected to generate 20–30% higher returns than conventional assets over a 5- to 15-year horizon. This reflects lower exposure to fossil fuel assets that may be retired early and reduced impact from falling fossil fuel demand and prices.
• Under the Limited Climate Action scenario, sustainable infrastructure is projected to deliver around 2% higher returns over 5 years and 10% over 15 years. This advantage comes from resilience measures that reduce exposure to physical climate risks by roughly 50% at low cost.

The figure below illustrates the relative performance of sustainable versus conventional infrastructure under both scenarios, based on analysis by Global Infrastructure Basel Foundation and Ortec Finance.

4. With 70% of the world’s population projected to live in cities by 2050, and the green energy transition accelerating worldwide, long-term demand for sustainable infrastructure investment is expected to grow steadily through mid-century.

Several factors are driving this growing demand:

• Renewables are becoming increasingly cost-competitive. In 2023, 81% of new renewable energy was cheaper than fossil fuels.
• Falling technology costs, growth in electric vehicles and storage, and expanding green finance instruments like bonds and impact funds are further broadening opportunities for investors.

5. Standardized frameworks, such as the FAST-Infra Label, play a crucial role in establishing sustainable infrastructure as an investable asset class.

• They bolster market confidence by establishing transparent sustainability metrics, reducing due diligence costs and ensuring that infrastructure investments align with clear and consistent benchmarks.
• They foster transparency, credibility and alignment of interests across all levels of the investment chain, from asset owners to fund managers and portfolio assets.

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Contributors to the white paper include:

• Christian Deseglise
• Natalia Moudrak, Managing Director, Climate Risk Advisory, Aon
• Cherie Gray, Global Lead Market Sustainability and Development, Public Sector Solutions, Swiss Re
• Marie Lam-Frendo, Partner, Chief Strategy Officer, Meridiam
• Pierre Cardon