London’s financial district, long touted as the future capital of green finance, is facing a reckoning. Once positioned to lead the world’s transition to sustainable investing, the City’s bold bet on green finance is faltering, as cracks appear in both the credibility and profitability of the sector. Recent moves by major institutions and mounting scrutiny over the actual impact of “green” investments have prompted questions about whether the promise of sustainable finance was ever more than a shiny veneer.
On September 13, 2025, Patrick Tiernan, the new CEO of the Lloyd’s insurance market, made waves by announcing that syndicates would no longer be pressured to refuse coverage for fossil fuels. Stressing that the market wanted to be “apolitical,” Tiernan’s stance signaled a shift away from the once-popular strategy of shunning fossil fuel producers in the name of climate action, according to MoneyWeek. The move reflected a growing sense that excluding such companies might do more harm than good, leaving crucial risks uninsurable and pushing fossil fuel firms toward less regulated sources of finance.
This development came on the heels of another significant blow to the green finance movement. Earlier in September, the Net Zero Banking Alliance—a United Nations-sponsored initiative co-founded by former Bank of England governor Mark Carney—paused its activities after a string of major banks, including Goldman Sachs, HSBC, and Barclays, decided to exit. The alliance had been a cornerstone of the City’s green ambitions, with Carney predicting a $5 trillion market that would cement London’s post-Brexit future as the global center for sustainable finance. But with key players pulling out, the vision of green finance as the City’s salvation is looking increasingly shaky.
Meanwhile, the challenges of making green investments profitable have become all too apparent. Shares in Orsted, the Danish wind power giant once favored by ESG funds, have halved over the past year. As MoneyWeek noted, "it’s a lot harder to make money from windmills than was first predicted." With government subsidies winding down, many green projects are proving fundamentally unprofitable. The City’s bet on a green boom has not paid off, and the number of new company listings in London has dwindled to almost nothing, with few major deals on the horizon.
The story isn’t just about London. Across Europe, the credibility of green finance is under scrutiny. Amundi Investment Solutions, Europe’s leading asset manager and one of the world’s top ten, has invested $1.1 billion in fossil fuel companies through green funds that comply with Environmental, Social, and Governance (ESG) criteria between 2024 and early 2025, according to IrpiMedia. Extending the analysis back to 2023, the total reaches $1.7 billion. These so-called green funds are expected to promote sustainable and ethical activity, yet they continue to channel substantial sums into companies like TotalEnergies, Shell, and Exxon Mobil.
Following updated European Sustainable Finance Disclosure Regulation (SFDR) guidelines in May 2024, Amundi renamed 11 of its funds, removing terms such as Net Zero or ESG, but did not change the underlying investments. The funds continued to finance fossil fuel giants, even as Amundi’s website promoted its commitment to “making a positive contribution to a better future” and urged investors to “make a difference” by choosing ESG solutions. When pressed on the apparent contradiction, Amundi stated, "the collective goal of carbon neutrality cannot be achieved simply by excluding companies in the energy sector. Amundi therefore accompanies and encourages their transformation, ensuring that they implement a climate strategy in line with the objectives of the Paris Agreement." Yet, none of the companies in which Amundi has invested are currently aligned with the Paris Agreement, according to IrpiMedia.
Among Amundi’s green funds, TotalEnergies is the largest recipient, receiving $438 million—more than triple what Shell received. TotalEnergies’ own sustainability report claims it aims for net zero emissions by 2050, with a plan to source 50% of its energy from renewables and 25% from low-carbon molecules. But in 2024, 87% of its energy production still came from fossil fuels and liquefied natural gas. Shell, the second-largest recipient at $145 million, is currently on trial in London over alleged pollution in Nigeria’s Niger Delta, while its own sustainability report concedes it is not on track to meet its 2050 climate targets.
Transparency is another sticking point. Changes in the makeup and criteria of sustainable funds are rarely communicated clearly to investors. Amundi’s decision to align with new European guidelines by changing fund names, rather than investment strategies, allows the company to comply with regulations without altering its approach. This lack of transparency leaves investors in the dark about the true nature of the funds they are supporting.
Yet, not all is gloom in the world of sustainable finance. On the same day as Tiernan’s announcement, the European Bank for Reconstruction and Development (EBRD) launched a new initiative called “Greening financial systems: delivering climate finance for all.” The programme aims to expand access to affordable green finance and accelerate climate action, with $634 million earmarked for 13 countries across Europe, Central Asia, and North Africa. The Green Climate Fund (GCF) is contributing $200 million in concessional loans, grants, and technical assistance, targeting a diverse array of beneficiaries from households and smallholders to large corporations.
The EBRD’s programme stands out for its emphasis on inclusivity and systemic change. At least 30% of subloans will go to areas outside capital cities, and 20% will be directed to women-led projects. By providing partner institutions with concessional funding, climate-risk tools, and specialized training, the programme seeks to unlock green lending opportunities and strengthen the ability of local banks to offer green finance independently. Since 2017, EBRD and GCF have mobilized over $5.2 billion in climate finance across three continents.
Still, the broader picture is one of uncertainty and reevaluation. The City of London’s dream of becoming the global green finance hub has not materialized as hoped. As MoneyWeek put it, "London’s financial markets need to ditch the green delusion and move on as quickly as possible – and get back to businesses where they can actually make money." The sector is at a crossroads: will it recommit to genuine sustainable finance, or will it pivot back to tried-and-true profit centers?
For now, the future of green finance remains as murky as ever. With regulatory scrutiny tightening, investor skepticism growing, and the economics of green projects under pressure, the next chapter for sustainable investing will require more than just rebranding and rhetoric. It will demand real transparency, measurable impact, and—perhaps most importantly—an honest reckoning with the limits of what finance alone can achieve in the fight against climate change.
