Some 53% of investors active in the energy and environment infrastructure sector have seen deals collapse over the past three years due to sustainability risks, a new report by S-RM has found.

According to S-RM’s 2025 Investor Sentiment Report: Forces of Change, sustainability was the biggest reason for deal collapse in the sector, followed by geopolitical (40%) and sanctions-related (36%) risks.

Some 150 investors were surveyed for the report, which found that while sustainability concerns were the leading cause of deal failure, geopolitical and political risk (75%) had the biggest impact on deal-making decisions in the energy and environment sector.

Sustainability risks (73%) were cited as the second-most influential driver, followed by regulatory instability (72%) and cyber security (66%).

When asked to identify the specific sustainability risks that have impacted their investment activity, some 57% said that resource management (including materials, water, waste, and pollution) played a role, while just under half (49%) cited environmental compliance and regulatory adherence.

Other factors cited included climate change adaptation and mitigation (41%), energy use and efficiency (37%) and biodiversity and other environmental impacts (27%).

Despite these risks, investor sentiment towards energy and environment infrastructure is positive, with 75% of respondents seeing it as an attractive investment opportunity.

“Investors in energy and environment infrastructure are navigating a sector where sustainability risks are central to deal success,” commented Ian Massey, head of corporate intelligence, EMEA at S-RM. “Resource management, regulatory compliance, and climate resilience are increasingly shaping whether deals go ahead, reflecting a broader shift toward responsible and resilient infrastructure investing.”

Massey added that while sustainability risks have the potential to derail deals, they can also “highlight areas where foresight and strategic planning can create competitive advantage. Investors who integrate sustainability considerations early in the deal process are better positioned to protect value and capitalise on opportunities in a sector that remains highly attractive over the long term.”

Looking to the future, investors said that they expect sustainability risks to continue influencing transactions, with 37% anticipating that these risks will increase over the next thee years, and 35% expecting them to remain unchanged. Read more here.