Sustainability Update - Summer 2026

Partner Alex Hyde reflects on recent developments affecting energy transition and sustainability leaders globally, and the implications for the executive leadership talent market.

At McKinsey’sGreen Business Building Summitin Stockholm in May, three words –  ‘better, faster, cheaper’ – framed an agenda focused on how to drive the energy transition.

With renewables outpacing fossil fuels and EV adoption picking up pace, we now have an adoption model. However, the current costs of technologies that would enable the decarbonisation of heavy industry and transport make achieving ‘better, faster, cheaper’ more challenging for hard-to-abate industries.

This fundamentally explains the slow progress being made in these areas, yet significant opportunities for innovation, investment and leadership continues. Geopolitical and macroeconomic events have further strengthened the business case for sustainable technologies, meaning those who develop, adopt and invest in the right solutions – not to mention hire the talent needed to execute these ideas – stand to be big winners from the next stage of transition.

Contrasting with the current moment

Since 2015, when the Paris Agreement was signed and ushered in a period of global focus on emissions reduction, sentiment on the climate agenda has peaked and dipped. It’s easy to look across the Atlantic, point the finger at the current administration, and ignore the multitude of other reasons that explain the shift. Amidst the hype of climate action, the corporate sustainability movement often became a values project that wasn’t sufficiently grounded in economics. This has made it easy for organisations and investors looking for efficiencies to deprioritise corporate sustainability teams and energy transition projects because the sums didn’t add up; political and investor sentiment shifts making these decisions less risky.

Public sentiment has also changed, with citizens increasingly questioning why tax revenues are being spent on projects from which they don’t feel immediate benefit. Voters in smaller nations in particular may wonder about the benefits of producing less carbon, jeopardising their industrial competitiveness and throwing money at sustainable projects while bigger emitters continue, and in some cases increase, the burning of fossil fuels.

This has enabled Trump 2.0 to be a supercharged catalyst of disruption across a climate agenda that leaders, investors and the public were already treating with increasing scepticism. It had become clear that reaching net zero, if achievable, would be expensive, and green jobs wouldn’t immediately replace those lost in the industries that had been the backbone of many economies.

A change in the weather?

The ‘vibe shift’ has further momentum, as it comes at a helpful time for big tech companies who have followed the energy majors’ lead in rolling back their sustainability initiatives. The climate commitments that were touted not so long ago, have become blockers that impede the rollout of data centres and the digital infrastructure required to drive the AI economy. After years progress on greenhouse gas reductions, the vast energy demand behind data centres and AI infrastructure has sent the emissions ofhyperscalers skyrocketing.Microsoft announced a 25% increase between 2024 and 2025. In the same period, Google’s emissions went up by 18% and Amazon’s by 16%.

There has been increasingly pushback from local-communities in the US to data-centre and AI infrastructure buildout. Whilst the hyperscalers may have happy shareholders, consumer energy bills have been soaring because of demand on the grid. Fears about water scarcity and pushback on noise, land use and neighbourhood impact have also all now grown to the extent that data-centre development has become abipartisan issueand could impede future projects.

In response, hyperscalers are concentrating capital into innovation for clean energy supply, including behind the meter solutions and other methods of lessening the impact of digital infrastructure rollout. Much of this innovation will likely have wider use cases across the energy transition, and there remains much hope that AI-based innovation will enable technologies such as fusion and geothermal to scale faster, providing solutions for other markets in the process. Whilst problematic in the short term, there is hope that the growth of the AI economy will create game-changing climate innovation. There is also hope that big tech emissions will drive investment in carbon removals and the wider carbon markets, as it’s increasingly difficult to see how they’ll get close to emissions targets at their current trajectory.

As some of the biggest companies globally roll back, many organisations that previously trumpeted their climate ambitions have retreated too, though it is important to state that this is not a universal trend. Whilst we have seen challenging headlines,most companies are continuing to invest in sustainability, with 46% of businesses surveyed by Trellis increasing sustainability headcount and budgets in the last two years, but there is a significant minority that is pulling back.

This comes at a time when the impact of a warming planet is increasingly apparent across the globe. London Climate Action Week took place in June amidst Europe’s second heatwave of the year. As climate leaders from across the globe gathered, the city’s infrastructure groaned under the pressure, with the disruption caused by extreme weather events and inevitable economic costs being experienced first-hand. At a human level,10,000 excess deathswere registered across Europe during the late-June heatwave andclimate extremes have become the new normal for the UK.One thing is certain: the costs associated with adaptation and building resilience, and the consequences of inaction are becoming all too real.

This cognitive dissonance is difficult to navigate, but we are seeing subtle and important changes. Whilst the number of mentions of ESG in earning calls has been dropping steadily, recent reports show that PE investors are increasingly scrutinizing whether the assets in their portfolios can withstand a changing climate. Sustainability reports published by 12 of the largest alternative asset managers show overall mentions of physical climate risks and related termsnearly doubledfrom a year before. Carlyle, General Atlantic, KKR and Partners Group AG all saw large increases. Climate breakdown is a concern for investors, though at least some are talking publicly about it this, developing adaption plans and building them into their investment theses.

Conflict and the case for energy sovereignty tipping the balance

The Iran war sparked themost significant energy crisisin history and whilst a peace deal had been reached, this has faltered several times. At the time of writing hostilities have resumed, with the disruption and volatility from the conflict seemingly set to continue impacting the global economy.

This disruption creates strong tailwinds for the energy transition. The bottleneck at the Strait of Hormuz is causing chronic price volatility and disruption to supply chains for oil, gas, fertilizers, and other critical chemicals that only strengthen the case for cleaner alternatives. Fossil fuel cost, supply and the need to consider the sovereignty of production, present an opportunity to reframe the drivers for clean energy, with emissions reduction as a by-product. Ultimately, the case for continued dependence on fossil fuels now needs to be considered on the basis of supply and price volatility, not just net zero targets.

As one investor put it to me, ‘the sun doesn’t have to go through the Straight of Hormuz to generate useable power.’ The conflict has created the worst energy shock in history, and the economic cost has been greaterthan the total cost of the UK achieving net zero by 2050,So, why the slow progress and lack of action?

The energy transition is a vast and complex subject, with some areas showing more progress than others as they have more advanced technologies and are becoming cheaper as increased demand drives costs down. These include renewable energy, mobility and batteries and energy storage, whilst those that are more complex are yet to reach this point and may not for some time.

Sustainable fuels, hydrogen, nuclear and fusion, and geothermal sit firmly in the latter camp. SAF, for example, costs three times more than standard jet fuel on average, but capital is being deployed for its development. For instance, Macquarie-backed Sky NRG achieved FID earlier in the year for their SAF facility in The Netherlands, breaking ground in June. Meanwhile, fusion is getting a lot of attention, with Proxima Fusion’s recent $468m Series A led by East X Ventures giving them a $2.7bn valuation.

Despite the challenges, we’re seeing an uptick in hiring confidence among our clients who have strong fundamentals, move fast, tolerate policy uncertainty and demand talent that can shift the dial.

Regional and industrial developments

Policy as a market driver, however, is becoming problematic and SAF policy, or more accurately policy uncertainty, was firmly on the agenda at the recent IATA AGM in Rio de Janeiro. Outgoing Director General Willie Walsh stated that hope for aviation reaching net zero by 2050 was ‘fading fast […] The goal is 65% [SAF use] or 500m tonnes by 2050. The gap is wide and not closing fast enough.’ Such uncertainty makes SAF infrastructure a risky investment when compared to digital infrastructure, and when this is often done from within the same energy transition or infrastructure funds, the lack of progress becomes more understandable.

Until there’s greater policy certainty on SAF, and more importantly, higher levels of confidence about getting a return on investment, we won’t see change at the pace required to drive these markets and reduce emissions to meet targets. The consensus view is that we won’t see significant SAF policy changes in the UK, and Europe, in the short to medium term, but there will be tweaks aimed at stimulating investment to more realistic timeframes. We can only hope they’ll be effective.

In the UK, the Labour government has remained committed to net zero by 2050, with the scale of its efforts providing at leastsome cushioningfrom the worst of the Iran war shocks. There has been pressure, however, to reopen oil and gas fields in the North Sea. The economics aredebatable, though whether it might be politically expedient for the new Prime Minister, Andy Burnham, do so is another matter. Returning to the North Sea could potentially bring back some of the energy majors back to the table, with several having quietly started to ramp up clean energy investment in the last 9-12 months, having privately acknowledged that they may have pivoted too hard back to fossil in 2025. This decision now sits with the Miatta Fahnbulleh, who has said she will be“pragmatic” on North Sea drilling, following her appointment as Energy Secretary after Ed Milliband’s move to Foreign Secretary. Given Milliband’s commitment to decarbonisation, we can expect to see the UK continuing to position itself as a global leader in climate action on the international stage.

In Europe, meanwhile, the EU has also insisted it will stay the course on net zero despite pressure to roll back commitments from right-wing politicians and lobbyists. The obstacles are the same as those facing the UK, though the collective power of the EU’s regulatory framework makes it better placed to combat any contrary lobbying robustly. This was recently seen with the European Commission tabling its formal Emissions Trading System (EU ETS) revision, which included a slower emissions cap trajectory and extended free allocation for industrial operators, alongside a mechanism to fold certified carbon removals into the scheme. It is at this stage a proposal, and not law, but it is indicative of Brussels buying industry time and not abandoning the target. We anticipate a similar outcome with the EU SAF mandate review, with SAF fuel volume likely to remain the same, with amendments expected on the type of SAF, to give the aviation industry the time needed to scale technologies including eSAF.

Asia’s energy transition has received a significant boost, as the conflict in Iransupercharges their move from fossil fuels to electronsand provides further evidence on how the fundamentals of ‘better, faster, cheaper’ need to be used to reframe the case for adoption. Key headlines from the region for me recently have beenTemasek raising their sustainability linked investments to $49bnto capture this opportunity and China setting the standard globally for energy security,barely flinchingthroughout the Iran conflict, despite 45-50% of its crude imports transiting Hormuz.

In the US, energy demand from data centre build-out has morphed their IRA-led energy transition to a power system transformation. This is putting huge strain on the grid and creating demand across clean energy and fossil fuels, withpermitting delays putting increased pressure on the system and speed of rollout. Policy changes from the One Big Beautiful Bill, and additionally Trump’s anti-wind agenda, are unhelpful to big tech companies on this front, and reflect that the coordinated economy-wide transition driven by IRA has stalled. Whilst this may be the case, solar and battery deployment continues, with ‘better, faster, cheaper’ driving investment and whilst slowing, US clean energy and transportation investment totalled$61bn in Q1 of 2026. A recent roundtable we co-hosted with Dan Stephens, Senior Partner at McKinsey, concluded that whilst there have been visible attempts to deprioritise clean-energy in the US, it remains a good place to do business for cleantech companies, despite it now being harder to navigate and get things done.

The view on talent as we look to the future

Hiring volume has largely mirrored the same pattern as the first two quarters of 2025; just as the initial shock of Trump’s return and tariffs hit hiring confidence only for it to make a resurgence later, we’ve seen a challenging opening quarter to 2026, with volume picking up considerably in Q2. Hiring managers have course-corrected, underlining the extent to which global uncertainty makes strong leadership a requirement.

The ‘better, faster, cheaper’ framing needs leaders who can respond to and drive this agenda with executive teams able to navigate the complexity to deliver this. These range from technology and engineering innovators, to commercial leaders who can lead GTM and structure deals. These professionals might be working alongside CFOs raising the finance needed to get FOAK projects to FID, and sitting underneath GMs able to work across the piece with the support of industrial advisors and independent board directors.

We are seeing a similar theme in large corporates, with sustainability leaders now under pressure to demonstrate how they create and protect value, or at the very least manage risk. For these leaders, ‘better, faster, cheaper’ is better framed by the need to demonstrate clear progress, quickly and with less budget.

These are the themes that are driving demand and we can look forward with more confidence as the fundamentals that continue to drive the energy transition, and move to a more circular economy, become ever more apparent.

I am always looking to speak with hiring managers looking to appoint leadership talent into their teams, and with people looking to make a move – don’t hesitate to get in touch!

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