Introduction: Making Sense of a Disordered Transition
We are living through a moment of painful disorientation. In 2025, the landscape of business, energy, and sustainability has few clear sign posts, but faces a wicked mix of conflicting signals. Leaders are facing an array of powerful and often contradictory forces: geopolitical upheaval, technological disruption, regulatory tightening, investor pressure, and growing societal expectations. Some trends point toward rapid decarbonization and systemic transformation, while others suggest retrenchment, backlash, or inertia.
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This is not the smooth evolution that the word transition suggests; rather, we are experiencing a jarring realignment of strategies, investments, and relationships.
In this environment, companies need a rigorous approach for finding their way. They must sharpen their ability to discern what matters, think across both short- and long-term horizons, and act with strategic foresight. Those that thrive in this environment will not be the most reactive or the most visionary. It will be those with the judgment to distinguish durable signals from transient noise.
This briefing launches The Next Economy, a series designed to help business leaders make sense of the structural forces reshaping energy, sustainability, and economic value. Each installment will offer insights for navigating these shifts with grounded insights, examining topics such as the decarbonization strategy, the role of AI in energy systems, the contested requirements of sustainability, and the reconfiguration of capital around global priorities.
Conflicting Currents in Energy Investment
Global investment in clean energy reached a record $2.1 trillion in 20241, a notable milestone that reflects an accelerating energy transition in some categories and regions. But looks a little closer, and this progress is tempered by mixed signals. Electrified transport, renewables, and grid upgrades all posted record funding levels, but overall growth slowed compared to previous years. China accounted for two-thirds of global growth, while investment in the U.S. held steady and European funding declined.
Despite these advances, current investment levels remain far below what is needed to achieve net-zero goals by mid-century. Meanwhile, fossil fuel investments continue to exceed $1 trillion annually2, driven by concerns about energy security and geopolitical instability. Companies like Shell and BP are scaling back their clean energy ambitions and refocusing on core oil and gas assets. In the US, a new administration is aggressively reversing the investments and commitments pursued through the Inflation Reduction Act. These reversals underscore the fragility of the transition and the ease with which momentum can shift.
This chaotic landscape is a hallmark of our era: powerful signals of transformation, potent sources of resistance, and abrupt shifts in direction.
The Energy Trilemma in Practice
Driving this dynamic in the energy transition is the enduring tension between affordability, security, and sustainability—the energy trilemma. For decades, energy policy prioritized the first two dimensions. In recent years, climate imperatives forced a reorientation of the massive global energy system, but not a replacement of incumbent fossil sources. Now, there is no agreed-on approach to addressing the tensions in the trilemma. Recent events—from Russia's war in Ukraine to post-pandemic inflation to the 2024 US election — have reminded governments and businesses alike that energy transitions do not happen in a vacuum.
Governments are advancing ambitious clean energy targets while simultaneously investing in fossil fuel backstops. The reopening of coal plants in Germany, once seen as an environmental leader, illustrates this paradox vividly. Globally, carbon pricing reached a record $104 billion in 20233, and fossil fuels made up just 35% of energy investments—yet coal demand remains near record highs.
In this context, companies need to hedge risks and explore new opportunities, recognizing that resilience will require both agility and patience. The energy transition will not proceed in a straight line. It will unfold through fits and starts, shaped by local realities and global shocks.
Business Strategy in a Shifting Landscape
In the sustainability arena, the business environment is increasingly shaped by social and environmental trends and events. Government regulation, investor priorities, and consumer sentiment all respond to these signals. Clearly, companies that manage risks and make long-term investments can’t ignore these factors, but they may be less likely to publicly confirm these priorities. Some key business drivers remain potent, including:
Climate Risk as a Strategic Driver: Companies must grapple with the growing materiality of climate-related risks. Physical risks—from extreme weather events to sea level rise—threaten supply chains, assets, and operations. At the same time, transition risks—including shifting policies, technologies, and market expectations—are redefining the landscape of competitiveness. Leaders who proactively assess and respond to both risk categories will be better positioned to safeguard long-term value and stakeholder trust.
Regulatory Flux and Investor Pressure: New regulations are changing the rules of the game. In particular, the EU’s Corporate Sustainability Reporting Directive (CSRD) is raising the bar on environmental disclosures. In contrast, recent U.S. policy changes are limiting shareholder power on social and environmental proposals. Companies face growing pressure to act, but also rising legal and reputational risks in a polarized political climate.
China’s Strategic Ascent in Clean Energy: One of the most consequential developments is the rising ambition of China to lead the clean energy industries of the future. From solar panel manufacturing to electric vehicles and grid-scale batteries, China has invested at scale and at speed. While sustainability may be a less popular political slogan in some regions, China’s industrial strategy suggests it is betting on clean energy as the foundation of long-term economic competitiveness. For global businesses, this signals not just a technological race, but a geopolitical and market realignment that cannot be ignored.
AI as a Double-Edged Force
No longer a technological phenomenon alone, AI is rapidly transforming every society and industry, and the pace will only accelerate in coming years. The eye-popping levels of investment in AI infrastructure across China, the United States, and the Middle East reflect the staggering stakes of this global race.
The societal and environmental consequences of this surge—both positive and negative—are likely to be vast and unpredictable. Much of the public discourse has focused on the energy-intensive nature of AI data centers, yet the same technologies driving up demand can also unlock new efficiencies. AI is already transforming energy forecasting, grid optimization, and emissions tracking. It has the potential to accelerate the transition—or deepen disparities, depending on how it is governed. Business leaders must look beyond sensational rhetoric and consider AI's structural impacts on labor, equity, social cohesion, resource use, innovation, and geopolitical advantage.
Looking Ahead: The Next Economy Themes
In the coming weeks, The Next Economy will explore the key dynamics reshaping business, investment, and sustainability. We will analyze the strategic significance of developments such as:
· The emergence of white hydrogen and its implications for energy markets
· The rising value of water resilience in climate adaptation
· Breakthroughs in geothermal energy and investor sentiment
· AI-enabled decarbonization across supply chains and infrastructure
· New investment frontiers in the ocean economy
· Decarbonizing heavy industry and scaling sustainable manufacturing
· Climate finance innovations and capital reallocation trends
· The evolution of corporate clean energy procurement strategies
Each piece will aim to surface durable insights, helping leaders develop a clear-eyed understanding of where value is being created—and where it is at risk. The question is not whether the energy and sustainability transition will proceed. It is whether leaders will develop the wisdom, agility, and strategic clarity to navigate it well. In an age of disordered transition and re-alignment, discernment is may be your most valuable asset.