Unlocking the Next Frontier: Insights on the Growth of Private Markets in Sustainable Finance
At the recent Environmental Finance Sustainable Debt Americas 2026 conference, Natixis CIB’s Head of Green & Sustainable Hub, Americas, Thatyanne Gasparotto, led a panel of industry pioneers in discussing an important evolution being witnessed in real time: The Growth of Private Markets in Sustainable Finance.
She highlights some of the key takeaways and insights from the group’s exploration into this critical market segment.
The landscape of sustainable finance is undergoing a profound shift. While public green bond markets have historically been in the spotlight, the real frontier of innovation and transition capital is increasingly moving toward private markets.
— Thatyanne Gasparotto
Head of Green & Sustainable Hub, Americas
As private credit, asset-based finance, and structured credit rapidly scale, they are no longer just alternative asset classes. In a sustained high-yield environment, sustainable private debt has emerged as a resilient "double-play" asset class—allowing institutional investors to capture attractive yields while simultaneously meeting their 2030 net-zero commitments.
The Capital Shift: Investor Appetite for Private Debt
The appetite for sustainable private debt is backed by powerful momentum in 2026. According to recent PEI Group data, sustainable funds now represent an approximate 22% of all closed-ended private debt funds currently in the market worldwide (mostly dominated by Article 8 structures) with sustainable Infrastructure Private Debt penetration reaching a significant 63% of the global market at this time.
Historically, institutional investors looking for ESG integration migrated to public equities or sovereign/corporate green bonds. Today, they are increasingly expanding into private debt strategies. Indeed, major asset owners and managers are putting this into practice having set ambitious sustainable investing targets to guide engagement through private credit.
Why? Private debt offers customized, bilateral deal terms, highly direct impact, and unique avenues for active stewardship.
The Measurement Challenge: Methodology in Private Credit & Securitization
In public markets, standardized ESG ratings and disclosure regulation provide a baseline, however imperfect. In private markets, we often have to build the yardstick ourselves.
During our discussion, we explored the evolving methodologies for assessing impact across diverse structures like private credit, asset-based finance (ABF), and securitization. The consensus was clear: intentionality and specificity are key. Navigating the "information gap"—specifically the lack of standardized, non-financial data from private borrowers is a common theme. Leading global managers are actively designing internal frameworks to overcome these data and disclosure limitations to integrate sustainability into risk and impact assessments, proving that the use of proxy data can also be credibly applied in select cases.
Scaling the Transition: Infrastructure and Real-World Impact
One of the most inspiring segments of our panel focused on private markets as a relevant driver of transition finance. Hard-to-abate sectors, require trillions of dollars to decarbonize.
Private markets, are uniquely suited by more flexible capital structures to support companies through their transition journey.
The panel discussed the practical application of market-guiding frameworks, such as the Canadian Taxonomy currently under development. This framework will help standardize and scale investments for sustainable infrastructure assets across Canada, leading to practical applications in the private credit space.
Overcoming the Hurdles: Transparency and Liquidity
Despite the sense of optimism, there are challenges faced by private markets: namely, transparency and liquidity.
By definition, private markets are less liquid and less transparent than their public counterparts. To combat this, our panelists emphasized the need for:
- Enhanced data standardization: Establishing standardized reporting templates between sponsors, borrowers, and LPs to streamline data collection.
- Technology integration: Utilizing advanced data platforms and existing proxies to track impact metrics at the asset level.
- Consistent borrower engagement: Ensuring clear and open communication regarding information sharing and any reporting expectations.
Looking Ahead
The "private" label is not an excuse for a lack of sustainability sophistication. In fact, due to the close relationship between private lenders and borrowers, private markets are arguably well positioned to drive low carbon investment.
Supporting the energy transition at the core of our business at Natixis CIB and we are driven to help clients navigate this next wave of financial innovation. Transition cannot be achieved in public markets alone; it will also need to be financed, structured, and scaled in private markets.
