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The Secondaries Market in 2026: Record Growth, Emerging Challenges, and What Lies Ahead

April 29, 2026
5 mins read
The secondaries market has tripled since 2019. We examine what's driving growth, how deal terms are evolving, and the role of AI in due diligence.

The private markets secondaries space has entered a new chapter. What was once a niche corner of alternative investments, used primarily by limited partners (LPs) seeking early exits from fund commitments, has grown into one of the most dynamic segments of global private capital. The market has tripled in size since 2019 and grown by approximately 50% between 2024 and 2025 alone, reaching an estimated $230 billion in annual transaction volume and now representing around 5% of all global private equity assets under management. 

This piece examines the forces behind that expansion, the structural shifts redefining the market, and the operational and regulatory challenges participants will need to navigate as the asset class continues to scale.

Market Growth and Shifting Deal Dynamics

Several converging factors have driven the secondaries market to its current size. A prolonged slowdown in IPO activity and traditional exits has created a liquidity bottleneck across private markets, leaving many LPs over-allocated to alternatives and constrained in their ability to make new commitments. The secondary market has become a primary mechanism for these investors to rebalance portfolios and free up capital.

Deal structuring has grown more sophisticated in step with market volumes. Ropes & Gray has observed a continued expansion in the use of purchase price deferrals and earnouts, and more recently, the introduction of deal-specific funding caps, limits on how much capital a buyer can be called to deploy before a specified date. These mechanisms allow sellers to achieve higher reference-date pricing while enabling buyers to manage capital deployment pacing and portfolio composition. In Q1 2026 alone, institutions initiated new secondary sales processes totaling north of $20 billion, some linked to denominator effect concerns as declines in public market portfolios pushed private allocations above target levels. Whether this proves a sustained driver of supply will depend on how institutional portfolios weather current market conditions.

The Three Transaction Types

Secondary transactions fall into three main categories: 

  • LP-led transactions, the original form, involve an LP selling existing fund interests, sometimes across a broad portfolio of hundreds of positions, typically through competitive auction processes with tight timelines. 
  • GP-led continuation funds, the fastest-growing segment, involve a sponsor transferring select assets into a new vehicle, giving existing LPs the option to cash out or roll forward. As of 2025, GP-led and LP-led volumes are roughly evenly split at around $115 billion each. GP-led buyout fund volume grew 39% year-over-year, while private credit secondaries saw nearly 300% year-over-year growth in GP-led activity. 
  • The third category, structured solutions, provides capital to a GP collateralized by existing fund assets and can take a wide variety of bespoke forms.

What Are the Operational and ESG Challenges in the Market?

One of the defining challenges in secondaries is the speed and scale of due diligence required, particularly in LP-led transactions. Buyers may need to evaluate hundreds, or in private credit secondaries, over a thousand, underlying positions with limited information and within windows of 24 to 48 hours. As Jessica Huang, Managing Director and ESG lead for private equity and secondaries at Ares Management, noted in a recent webinar:

Against this backdrop, LP expectations around ESG integration have risen sharply. LPs are now holding secondaries to a standard closer to that applied to direct investments, with requests for Article 8-classified funds, look-through exclusion lists, and UN Global Compact compliance screening becoming more common. Main exclusion categories include fossil fuels, controversial weapons, tobacco, and gambling, though definitions and revenue thresholds vary significantly across mandates. SFDR 2.0, currently in draft form, may introduce additional mandatory exclusion categories that managers are monitoring closely. In LP-led deals where buyers are inheriting a broad portfolio of assets, highly granular opt-outs can mean missing certain large transactions, a trade-off that must be clearly communicated to LPs.

The Role of Technology and AI

Technology has become central to the scaling of secondaries operations. AI tools are now applied across controversy screening, ESG data analysis, and emissions estimation, where direct disclosures are unavailable. A particular challenge in the asset class is coverage: many underlying companies are small or mid-market private businesses not captured in conventional databases.

Market participants consistently emphasize that AI outputs serve as inputs to human judgment, not as replacements for it. At Ares, screening results are reviewed by ESG specialists before being passed to deal teams for final decisions.

What the Future Holds

Transaction volumes are forecast to continue rising as both the seller and buyer universes expand. Private credit, infrastructure, and structured secondaries all represent areas of growing specialization and regional expansion, particularly in Asia, where secondary activity has been limited but is expected to grow as investment programs mature, broadening the market further. Capital supply dynamics bear watching: while dry powder remains substantial, deal volume growth has outpaced fundraising since 2023, which could create pricing or capital constraints. The entry of retail investors through evergreen vehicles adds a meaningful new source of capital but brings different liquidity expectations and regulatory considerations.

On the operational side, the sophistication of deal terms, the complexity of ESG compliance, and the volume of data processed per transaction are all increasing. Firms that can integrate technology into their diligence and monitoring workflows, while preserving the human judgment layer, will be best positioned to manage market growth. Secondaries are no longer a supplementary liquidity tool; they have become a structural feature of how private markets operate.

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The e-scooter and e-bike rental industry is grappling with significant ESG risks, driven by regulatory challenges, financial instability, and safety concerns.

Lime, Bird, and Voi face challenges in environmental sustainability, particularly regarding waste management and scooter lifecycles. They also deal with social risks, such as accidents and legal issues related to safety, prompting cities like Madrid and Paris to impose bans or regulations. Regulatory compliance remains difficult, as seen with Voi's license revocations in Brussels. Additionally, Bird filed for bankruptcy in 2024 amid financial struggles, reflecting broader industry issues.

To top it off, the industry is also under pressure to adopt more responsible governance practices, including addressing labor conditions, consumer rights, and transparency in operations.

What are the most pressing ESG challenges currently facing the electric scooter rental sector?
Read to find out.

Lime: Confronting Safety, Legal, and Environmental Challenges

Lime has faced significant ESG risks, including scrutiny over safety and maintenance issues related to its scooters, which have resulted in lawsuits and fines from local authorities like TfL and Brent Council. Environmental concerns arise from accusations of e-bikes being dumped in rivers. The company also struggles with legal troubles, facing sanctions in Andalucía and disputes over permits in Brussels and Madrid. Financially, Lime has exited several markets and laid off 14% of its staff, highlighting its vulnerabilities in governance, environmental, and social responsibilities.

lime controversies

Key Controversies:

Bird: Governance, Safety, and Market Challenges

Bird has been facing significant ESG risks following its 2024 Chapter 11 bankruptcy due to severe financial issues, resulting in market exits, layoffs, and scooter scrapping. Legal challenges include lawsuits over scooter misuse in Denver and a class action in Austria over unfair liability clauses. Safety concerns in cities like Zaragoza and Málaga have led to revoked operating licenses, while maintenance issues and parking violations in Freeport and Appleton have harmed their reputation. Despite restructuring efforts, Bird’s recovery path is uncertain, exposing it to long-term governance, operational, and environmental risks.

bird controversies

Key Controversies:

Voi: Regulatory Struggles and Public Backlash

Voi Technology faces significant ESG risks linked to financial issues and regulatory challenges. In 2024, the company laid off 120 employees to improve profitability. It is disputing the termination of its scooter service in Seville and license revocations in Brussels and Bremen. Ties to sanctioned Russian oligarch Alexei Mordashov have raised scrutiny in cities like Liverpool and Bristol. Additionally, the company is facing consumer complaints about misleading advertising and safety issues, including a scooter fire in Bristol.

voi controversies

Key Controversies:

Conclusion

The electric scooter and e-bike rental industry faces significant ESG challenges that place its future sustainability and growth on shaky ground. Companies like Lime, Bird, and Voi must address regulatory compliance, safety concerns, and financial instability to regain public trust. By prioritizing responsible governance, enhancing safety measures, and demonstrating commitment to environmental stewardship, these firms can pave the way for a future where micromobility thrives as a safe and sustainable transportation option.

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In a significant policy reversal, Britain has officially abandoned its plans to develop a "taxonomy" for green investments, marking a notable shift in the country's approach to sustainable finance regulation. The decision, announced by the UK Treasury on July 15, 2025, signals growing concerns about the practical implementation of ESG frameworks and reflects broader challenges in sustainable finance regulation.

The Abandoned Framework

The UK's green taxonomy, first proposed in 2020, was designed to provide clear definitions of environmentally sustainable economic activities. Similar to the EU's taxonomy, it aimed to create standardized criteria to help investors identify genuine green investments and combat greenwashing. However, after extensive consultation, the Treasury concluded that the taxonomy "would not be the most effective tool to deliver the green transition."

Following a comprehensive review process, HM Treasury determined that alternative approaches would be more suitable for advancing the UK's green finance objectives. The decision represents a departure from the EU model and highlights the ongoing challenges in developing effective sustainability frameworks.

Market Implications

The abandonment of the taxonomy creates immediate challenges for investors and financial institutions operating in the UK. Without standardized official definitions, financial institutions must navigate a more complex landscape of varying private sector standards and frameworks.

For asset managers, the absence of official guidance means continued reliance on existing voluntary standards and third-party frameworks. This fragmentation could complicate investment decision-making, particularly for institutions operating across multiple jurisdictions with different regulatory requirements.

The decision may also impact the UK's position in global sustainable finance markets, where standardized taxonomies are increasingly seen as important tools for directing capital toward environmentally beneficial activities.

Industry Response

The decision has generated significant discussion within the financial sector. The UK Sustainable Investment and Finance Association (UKSIF) expressed disappointment with the announcement. Oscar Warwick Thompson, Head of Policy and Regulatory Affairs at UKSIF, called for "swift delivery of commitments on transition plans and sustainability reporting standards" as alternative measures to support the green transition.

Industry stakeholders have emphasized the need for clarity on what alternative approaches the government will pursue to support sustainable investment and address greenwashing concerns in the absence of the taxonomy.

Regulatory Context

The UK's decision reflects broader challenges facing regulators worldwide in developing effective sustainability frameworks. Creating standardized criteria that can effectively span multiple economic sectors while remaining practical for implementation has proven complex across various jurisdictions.

Key implementation challenges that have influenced regulatory approaches include:

  • Compliance costs and administrative burden for businesses
  • The technical complexity of standardizing criteria across diverse economic activities
  • Ensuring frameworks drive meaningful environmental outcomes rather than just compliance
  • Balancing comprehensiveness with practical usability

Future Direction

While stepping back from the taxonomy approach, the UK government has indicated its continued commitment to supporting sustainable finance through alternative mechanisms. The Treasury has suggested that other policy tools may be more effective in driving the green transition, though specific details of these alternative approaches have not yet been fully outlined.

For companies and investors, this development underscores the importance of developing robust internal ESG assessment capabilities and maintaining familiarity with multiple sustainability frameworks. It also highlights the continued role of market-led initiatives and private sector standards in establishing credible sustainability criteria.

The decision may prompt other jurisdictions to reassess their own approaches to sustainable finance regulation, particularly as questions about the effectiveness and implementation of various frameworks continue to evolve.

As the sustainable finance landscape continues to develop, finding the optimal balance between regulatory guidance and market flexibility remains an ongoing challenge for policymakers and financial sector participants worldwide.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.

Luxury brand Loro Piana, owned by LVMH, has been placed under a one-year judicial administration by an Italian court after a labor exploitation investigation uncovered serious abuses within its supply chain. According to Reuters, workers at a subcontracted factory were paid as little as €4 per hour and subjected to 90-hour workweeks, often living inside the premises. One worker was reportedly attacked after requesting unpaid wages, requiring 45 days of medical treatment.
The case highlights the growing scrutiny of labor conditions in Italy’s fashion manufacturing sector, especially among high-end labels. Loro Piana is now the fifth luxury brand, joining Dior, Armani, Valentino, and Alviero Martini, under court supervision due to supplier-related violations.

A Complicated Web of Subcontracting

What sets this case apart is the complexity of the supply chain. Loro Piana did not contract directly with the workshop where the violations occurred. Instead, it worked through two front companies, both of which lacked actual manufacturing capacity. These intermediaries then subcontracted the work to a network of unregistered or poorly monitored producers. All the firms involved in this chain have been swept up in the investigation.

This multi-tier outsourcing structure made it difficult to detect violations and raises questions about accountability. The Milan court noted that Loro Piana "culpably failed" to supervise its partners, prioritizing cost and output over due diligence.

Why It Matters

Luxury brands trade on trust and exclusivity. Consumers expect not just quality, but integrity, especially regarding sourcing. When serious labor violations are revealed, the reputational risks extend far beyond one product or supplier. They affect brand credibility, investor confidence, and long-term consumer loyalty.

This incident also reinforces a trend: regulators are increasingly willing to intervene when voluntary monitoring fails. Judicial administration isn’t just symbolic; it’s a legally binding oversight mechanism aimed at forcing systemic change.

The Path Forward

For fashion brands, this is a clear signal that supply chain governance must go deeper. That includes mapping indirect suppliers, improving transparency around subcontracting, and enforcing ethical standards at every level. Simply trusting the next link in the chain is no longer enough.

In a sector built on craftsmanship and heritage, safeguarding those values behind the scenes is just as important as what ends up on the runway.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.

The European Union is trying to tackle a big problem: imported goods that drive deforestation. A new Deforestation Law, planned to take effect at the end of 2025, would require companies to prove that products like cocoa, coffee, soy, and timber are not linked to forest loss. It’s an ambitious effort to make supply chains more sustainable and to hold global companies accountable.
But not everyone is on board.

Why the Law Matters

The law is rooted in a clear goal. Agriculture and forestry are responsible for the vast majority of global deforestation, and many of the products linked to this destruction end up in European markets. The EU hopes to slow forest loss, protect biodiversity, and reduce climate impact by tightening import standards. The regulation also reflects growing demand from consumers and investors who want more responsible sourcing and transparency.

Who’s Pushing Back and Why

Over the past few weeks, opposition has gained steam from both industry leaders and EU governments.

On the corporate side, food companies like Mondelez, Mars, and Hershey are asking the EU to delay the rollout. They argue that the regulation could raise costs, cause supply disruptions, and hurt competitiveness. With cocoa prices already hitting record highs, many producers say they lack the tools and infrastructure to meet the new requirements.

At the same time, 18 EU countries, including Italy and Austria, have written to the European Commission urging revisions. Their concerns echo industry concerns: the law might be too complicated, costly, and difficult for small suppliers to navigate.

What It All Means

This growing pushback highlights a real tension. On one hand, the EU wants to lead on environmental issues and use its market power to drive global change. On the other hand, companies and governments are warning that good intentions could come with serious trade-offs.

The next few months will be key. If the EU weakens the law too much, it could undermine its climate credibility. But if it presses ahead without flexibility, it risks creating economic strain and cutting off small producers from the European market.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.

As the global sustainability conversation matures, so does the language. Concepts like blue bonds, carbon leakage, and financed emissions are no longer the domain of climate policy insiders; they’re now central to decision-making in boardrooms, supply chains, and marketing teams. Yet, as climate finance grows more complex, many professionals lack the vocabulary to keep up.

That’s where Vogue Business comes in. The publication has released a Climate Finance Glossary designed to decipher the technical terms reshaping corporate sustainability. While Vogue may be best known for fashion, this initiative acknowledges the deep financial implications of sustainability, particularly in industries like apparel, where environmental impact is closely tied to sourcing and production decisions.

From Carbon Budgets to Just Transition

The glossary includes more than two dozen terms, covering core themes like green and blue bonds, carbon border adjustments (CBAM), nature-based solutions, and the Just Transition. It also addresses frameworks that investors and regulators are now embedding in policy and disclosures, such as double materiality, ESG integration, and science-based targets.

The definitions are not oversimplified; they’re clear but grounded in academic and policy expertise. Contributors include researchers from the University of Exeter and Oxford’s Smith School of Enterprise and the Environment, lending credibility to what could otherwise be seen as a lightweight effort.

The result is a tool that helps close the gap between sustainability and finance teams, especially in companies navigating incoming ESG regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD) or the Green Claims Directive.

Why This Glossary Matters

Many sustainability professionals, especially those outside the finance world, are overwhelmed by ESG jargon. At the same time, finance teams often lack the environmental literacy to assess risks in areas like biodiversity loss or Scope 3 emissions. This glossary offers a shared language.

More than just a communications tool, it’s a strategic enabler. With greater climate disclosure, rising litigation risks around greenwashing, and investor expectations for transparency, understanding climate finance is no longer optional. It’s a baseline requirement for leadership.

This glossary arrives not a moment too soon for industries like fashion and retail, where storytelling, brand purpose, and supply chain transparency intersect.

Final Thoughts

The Vogue Business Climate Finance Glossary signals something larger: climate finance is no longer niche. It’s becoming a mainstream business competency. And when major business media take steps to make it more accessible, they’re not just informing; they’re helping shape the future of corporate sustainability.

As climate risk becomes investment risk and ESG moves from marketing to materiality, shared understanding will be the foundation of credible action.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.

Held from June 21–29, London Climate Action Week (LCAW) 2025 brought together over 45,000 participants across 700+ events, emphasizing London’s role as a global hub for climate finance and leadership. As geopolitical uncertainty clouds climate ambitions, this year’s event signaled a broader market pivot: investors are now prioritizing regions with regulatory clarity and policy momentum, namely Europe and Asia.

A joint survey from Bain & Company and the World Business Council for Sustainable Development, released during the week, found that 75% of global firms now prefer to invest in Europe or Asia for climate-related initiatives. Over half reported a declining appetite for U.S.-based projects, citing inconsistent federal climate policies and rising political risk.

Policy Signals from the UK

UK Energy Secretary Ed Miliband used the event to announce a bold step forward: the government will invest £30 billion annually in clean energy infrastructure through 2035. His remarks positioned the UK as a “clean energy superpower,” with a dual focus on energy security and economic renewal.

He also outlined plans for new corporate sustainability reporting standards, a move intended to improve transparency, build investor confidence, and ensure alignment with the UK's net-zero targets. These commitments were part of the UK’s post-Brexit green industrial strategy, distinguishing it from recent ESG policy slowdowns in Brussels and Washington.

Climate Finance and Market Confidence

 One of the most prominent themes throughout the week was capital mobilization. At the “Finance Live” forum, asset managers, banks, and insurers debated how to align their portfolios with net-zero goals while navigating geopolitical instability and rising greenwashing scrutiny. Key discussions included scaling blended finance vehicles, investing in transition technologies, and strengthening ESG data governance.

Meanwhile, sessions like the Nature Hub spotlighted biodiversity and natural capital, moving beyond carbon to more holistic definitions of environmental value. This reflects a growing consensus that an effective climate strategy must include nature-based solutions and ecosystem restoration.

The Broader Message: A Shift in Global Climate Leadership

While the U.S. backtracks on core climate regulations, London and Europe are entering a leadership void. For global investors, that means that developing a climate strategy now includes not only where to invest but also where to trust. In that context, LCAW 2025 offered both policy and finance updates and a credibility reset.

The takeaway is clear: in an age of fragmented regulation and climate politicization, market trust flows towards stability. London Climate Action Week didn’t just reflect that shift; it helped define it.

Held from June 21–29, London Climate Action Week (LCAW) 2025 brought together over 45,000 participants across 700+ events, emphasizing London’s role as a global hub for climate finance and leadership. As geopolitical uncertainty clouds climate ambitions, this year’s event signaled a broader market pivot: investors are now prioritizing regions with regulatory clarity and policy momentum, namely Europe and Asia.

A joint survey from Bain & Company and the World Business Council for Sustainable Development, released during the week, found that 75% of global firms now prefer to invest in Europe or Asia for climate-related initiatives. Over half reported a declining appetite for U.S.-based projects, citing inconsistent federal climate policies and rising political risk.

Policy Signals from the UK

UK Energy Secretary Ed Miliband used the event to announce a bold step forward: the government will invest £30 billion annually in clean energy infrastructure through 2035. His remarks positioned the UK as a “clean energy superpower,” with a dual focus on energy security and economic renewal.

He also outlined plans for new corporate sustainability reporting standards, a move intended to improve transparency, build investor confidence, and ensure alignment with the UK's net-zero targets. These commitments were part of the UK’s post-Brexit green industrial strategy, distinguishing it from recent ESG policy slowdowns in Brussels and Washington.

Climate Finance and Market Confidence

One of the most prominent themes throughout the week was capital mobilization. At the “Finance Live” forum, asset managers, banks, and insurers debated how to align their portfolios with net-zero goals while navigating geopolitical instability and rising greenwashing scrutiny. Key discussions included scaling blended finance vehicles, investing in transition technologies, and strengthening ESG data governance.

Meanwhile, sessions like the Nature Hub spotlighted biodiversity and natural capital, moving beyond carbon to more holistic definitions of environmental value. This reflects a growing consensus that an effective climate strategy must include nature-based solutions and ecosystem restoration.

The Broader Message: A Shift in Global Climate Leadership

While the U.S. backtracks on core climate regulations, London and Europe are entering a leadership void. For global investors, that means that developing a climate strategy now includes not only where to invest but also where to trust. In that context, LCAW 2025 offered both policy and finance updates and a credibility reset.

The takeaway is clear: in an age of fragmented regulation and climate politicization, market trust flows towards stability. London Climate Action Week didn’t just reflect that shift; it helped define it.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.

In a recent interview with Climate Action, Maha Chihaoui, ESG Analyst at SESAMm, discussed how SESAMm’s AI-powered solutions are reshaping ESG analysis. Maha, who leads ESG research and methodology development at SESAMm, outlined how the company addresses the challenges of self-reported ESG data, which can be inconsistent, biased, and outdated.Discover Maha’s take on how AI-driven insights and risk detection transform ESG analysis below.

1. Many ESG datasets rely on company self-reporting. What are the main limitations of that approach, and how does AI help address them?

Self-reported ESG data can be incomplete, inconsistent, or subject to bias, as companies may selectively disclose positive information while downplaying or omitting negative impacts. This lack of standardization also makes it difficult to compare ESG performance across different firms or industries. Additionally, self-reporting often lags behind real-time events, reducing the timeliness and relevance of the data.

At SESAMm, we take a complementary, “outside-in” approach using AI. Our state-of-the-art AI algorithms analyze millions of public documents every day, including news articles, NGO reports, legal filings, and more, to detect ESG-related controversies and risks. This allows us to surface controversies in near real-time, helping investors get a more accurate and timely picture of actual behavior.

2. One of SESAMm’s latest innovations is real-time UNGC violation screening. Why is the UN Global Compact such a critical framework for investors and corporates today?

The UN Global Compact (UNGC) holds critical importance for investors because it carries strong global credibility as a United Nations–endorsed initiative, signaling alignment with universally accepted norms that enhance corporate reputation and stakeholder trust.

The framework provides holistic ESG guidance across key areas—human rights, fair labor practices, environmental sustainability, and anti-corruption—enabling companies to manage risks and opportunities comprehensively. By committing to UNGC principles, companies proactively mitigate legal, operational, and reputational risks associated with violations in these areas.

For investors, especially those subject to SFDR, the UNGC is directly linked to regulatory obligations. PAI indicator #10 specifically asks whether a company has violated the principles of the UNGC or other international norms. Our tool is built on a clear and concise methodology that enables thorough screening, and with the support of advanced AI models, it makes the assessment faster, more consistent, and scalable—efficiently identifying violations or risks of violating the UN Global Compact principles across thousands of companies, thereby supporting both compliance and active risk management.

3. How does SESAMm's AI-driven UNGC screening work in practice?

The SESAMm's AI-driven UNGC screening identifies and classifies ESG controversy events based on their potential breaches of the UN Global Compact Principles into three risk levels:

  • Violator (clear and severe breaches),
  • Watchlist (possible but unconfirmed violations),
  • Low Risk (concerns without clear evidence).

These risk statuses are dynamic, reflecting changes in a company’s behavior over time. The system emphasizes transparency by providing detailed explanations and audit trails for each event, enabling clients to investigate further rather than relying on opaque “black box” results. Ultimately, event-level flags can be aggregated to guide company-level decisions, such as exclusions from investment universes.

Clients can filter and explore these events within our dashboards or receive alerts and reports as part of their risk monitoring workflows. What makes this unique is the combination of speed, granularity, and global scale—we’re able to capture and classify relevant controversies days or even weeks before they appear in traditional ESG data sets.

4. Based on your experience, how are investors using real-time controversy data in their decision-making processes?

We’re seeing investors use real-time controversy data in several key areas. During due diligence, it helps identify hidden risks in acquisition targets or portfolio companies, especially in private markets where traditional ESG data is sparse. For ongoing monitoring, firms use our alerts to track emerging controversies that may affect their holdings or counterparties, from suppliers to borrowers.
We also see it integrated into ESG scoring models, exclusion lists, and engagement strategies. In some cases, controversy data prompts further investigation or direct conversations with company management. It enables investors to act sooner and with greater confidence—before a risk becomes reputational or regulatory damage.

5. SESAMm recently launched new AI ESG Assessment Reports. How do these differ from traditional ESG ratings?

Traditional ESG ratings are often backward-looking and based largely on disclosed information. Our AI ESG Assessment Reports take a different approach—they’re built entirely on public data analyzed by AI in near real-time. The reports cover company-level ESG controversies, regulatory and industry pressures, sanctions screening, and more.
What makes them powerful is the speed and coverage. Users can generate a detailed ESG report on any public or private company—globally—in under 30 minutes. That includes small or mid-cap firms that may not be covered by major rating providers. It’s an accessible, scalable solution for firms that need faster, more flexible ESG insights in today’s fast-moving environment.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.

U.S. banks have dramatically increased fossil fuel financing in a notable contradiction with the narrative established after COP26. According to the 2025 Banking on Climate Chaos report, compiled by the Rainforest Action Network and its partners, global banks significantly scaled up their support for the fossil fuel industry in 2024, with a staggering $162 billion increase, pushing total financing to $869 billion.

U.S. institutions are at the forefront of this backslide. JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo accounted for one-third of global fossil fuel financing, approximately $289 billion. JPMorgan alone provided $53.5 billion, a 35% rise in funding that placed it at the top of the global list. Bank of America and Citi each contributed over $44 billion, while Barclays led among European banks, increasing its lending by 55% ($35.4 billion).

Why the Sudden Surge?

This resurgence coincides with the political shift in the U.S. following the Trump administration’s departure from the Paris Agreement and weakened climate policies. In parallel, several major banks have exited the Net-Zero Banking Alliance, prompting environmental groups to accuse them of “walking away from climate commitments.”

What This Means for Climate Risk

The spike in fossil fuel financing carries profound implications. First, it increases banks’ exposure to climate liability risk. A Financial Times analysis cites growing concerns that banks may face litigation due to their financing practices in relation to climate change. Second, funneling money back into carbon-intensive sectors undermines global efforts to limit warming to 1.5 °C; long-term goals rest on systemic transitions away from fossil fuels.

Public Relations vs. Funding Reality

Banks have defended their actions by emphasizing fossil fuels and clean energy investments. JPMorgan, for instance, claims it invested $1.29 in green energy for every dollar in fossil fuel financing. Nevertheless, critics argue that green financing claims ring hollow when fossil fuel funding is simultaneously ramping up.

Rebuilding Credibility in Sustainable Finance

The disconnect between words and actions is a challenge for the financial sector. With growing scrutiny on climate claims, stakeholders demand greater transparency and accountability. Greenwashing has evolved from a reputational issue to a regulatory one, impacting trust and market access. Banks that emphasize climate commitments while increasing fossil fuel investments risk losing credibility. To maintain stakeholder confidence, a genuine transition to clean energy financing is crucial. Trust now hinges on consistent actions rather than just marketing promises, allowing us to build a sustainable future together.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.

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