List of 10 Best Climate Funds to Invest in 2026 in UK, Europe, US, Asia and UAE

From Paris-aligned equity trackers to carbon-credit exposures and transition infrastructure platforms, capital is concentrating in climate funds with clear mandates and recent Q4 2025 updates. Here is a vetted list spanning the UK, Europe, US, Asia and the UAE—built on the latest manager disclosures, policy moves, and investor flows.

Published: December 7, 2025 By James Park, AI & Emerging Tech Reporter Category: Climate Tech

James covers AI, agentic AI systems, gaming innovation, smart farming, telecommunications, and AI in film production. Technology analyst focused on startup ecosystems.

List of 10 Best Climate Funds to Invest in 2026 in UK, Europe, US, Asia and UAE
Executive Summary
  • Q4 2025 saw renewed allocations into climate strategies as managers updated mandates and reported fresh flows, with robust interest in clean energy, carbon markets, and Paris-aligned indices (BloombergNEF Climatescope 2025).
  • Policy momentum in Europe and the UK keeps Paris-aligned and energy transition funds in focus for 2026 allocations, as label and disclosure rules tighten across the bloc (ESMA regulatory updates; FCA briefings).
  • Investors are diversifying beyond pure-play renewables into grid, storage, and carbon allowances exposure, supported by updated November 2025 fund factsheets and product notes (iShares ICLN; KraneShares KRBN).
  • Asia and the UAE are stepping up with dedicated transition and climate investment platforms, providing regional access and co-investment opportunities into 2026 (GenZero; Masdar Green REIT).
Why These 10 Funds Are Positioned for 2026 A surge of late-2025 updates from asset managers and climate platforms points to a tighter, more policy-aligned opportunity set for 2026. We prioritized vehicles with clear mandates, transparent reporting, and liquid secondary markets where applicable, along with platforms that disclosed recent capital deployment or portfolio activity in Q4 2025. The list spans clean energy equities, carbon credits, Paris-aligned indices, and real assets to balance performance drivers and policy risk across geographies (BloombergNEF Climatescope 2025). Regulatory direction in Europe and the UK continues to favor funds aligned to Paris Agreement objectives, which is reflected in recent fund literature and index methodologies for Paris-Aligned Benchmark (PAB) strategies. Asset managers reiterated their decarbonization guardrails and exclusions in late-2025 commentary, reinforcing the appeal of climate-labeled funds going into 2026 (MSCI Climate Indexes methodology; FCA policy materials). The 10 Best Climate Funds Across Regions 1) UK/Europe — iShares Global Clean Energy UCITS ETF (INRG). A flagship UCITS vehicle offering diversified clean energy equity exposure, backed by deep liquidity and frequent product updates. November 2025 materials emphasize index methodology, holdings transparency, and cost controls tailored for European investors (BlackRock iShares INRG). 2) UK/Europe — L&G Clean Energy UCITS ETF. Legal & General Investment Management’s thematic ETF captures a broad clean energy value chain, including equipment and grid support, with Q4 2025 documentation highlighting constituent rebalances and sector coverage breadth (L&G Clean Energy UCITS ETF). 3) Europe — Amundi MSCI Climate Paris Aligned UCITS range. European investors seeking Article 9-style alignment have leaned into Amundi’s PAB strategies; late-2025 manager notes underscore systematic decarbonization pathways and exclusions for higher-emitting activities (Amundi Climate Paris Aligned ETFs; MSCI Climate Indexes). 4) Europe — BNP Paribas Energy Transition Fund. A concentrated active strategy targeting energy transition leaders across renewables, electrification, and enabling technologies, supported by routine factsheet updates and stewardship reporting through Q4 2025 (BNP Paribas Energy Transition). 5) Europe — Pictet-Clean Energy Transition. Pictet’s thematic franchise has maintained a disciplined approach to sub-themes like grid, storage, and efficiency; November 2025 investor materials detail exposures and engagement priorities ahead of 2026 positioning (Pictet Clean Energy Transition). 6) US — iShares Global Clean Energy ETF (ICLN). Among the most liquid global clean energy ETFs, ICLN’s late-2025 updates focus on diversified holdings and index changes that reflect component supply chains, helping mitigate single-technology risk (iShares ICLN). 7) US — Invesco WilderHill Clean Energy ETF (PBW). PBW offers high-beta exposure to US-listed clean energy and efficiency firms; recent product literature highlights periodic reconstitution and risk disclosures relevant for 2026 positioning (Invesco PBW). 8) US — KraneShares Global Carbon Strategy ETF (KRBN). For investors seeking uncorrelated climate exposure, KRBN tracks global carbon allowance futures, with late-2025 commentary noting evolving liquidity and regulatory frameworks in cap-and-trade markets (KraneShares KRBN). 9) Asia — GenZero (Temasek platform). For qualified investors, Singapore-based GenZero provides a multi-pronged approach—technology, nature-based solutions, and carbon markets—supported by ongoing deployment updates and portfolio news in Q4 2025 (GenZero). 10) UAE — Masdar Green REIT. A specialized real estate investment trust focused on green-certified assets in the UAE, with steady disclosures and asset updates in 2H 2025 that align with regional decarbonization and energy efficiency priorities (Masdar Green REIT). Key Fund Differentiators Heading Into 2026 Investors are demanding clear climate alignment, simple metrics, and liquidity. For more on [related sustainability developments](/sustainability-statistics-the-numbers-driving-corporate-climate-strategy). That explains persistent interest in Paris-aligned UCITS equity funds and large clean energy ETFs that offer scale and transparency. Carbon allowance exposure is also a differentiator for portfolio construction into 2026, with products like KRBN providing a distinct policy-driven return stream that is articulated in recent product notes (KraneShares KRBN; MSCI Climate Indexes). At the same time, regional platforms in Asia and the Gulf are building pipelines in transition assets—an area drawing institutional allocations that look beyond listed equities. Late-2025 manager communications emphasize grid, storage, efficiency, and carbon removal solutions as themes likely to attract incremental capital in 2026 (GenZero; Masdar Green REIT). For more on related Climate Tech developments. Company Comparison: 2026-Ready Climate Funds Snapshot
Fund/PlatformRegionVehicle TypeNotes & Source
iShares Global Clean Energy UCITS (INRG)UK/EuropeUCITS ETFLarge, diversified clean energy basket; frequent disclosures (BlackRock iShares)
L&G Clean Energy UCITSUK/EuropeUCITS ETFBroad value-chain exposure; periodic rebalance updates (LGIM)
Amundi MSCI Climate Paris Aligned UCITSEuropeUCITS ETF rangePAB alignment, decarbonization rules (Amundi; MSCI)
BNP Paribas Energy TransitionEuropeActive mutual fundEnergy transition focus; active stewardship (BNP Paribas AM)
Pictet-Clean Energy TransitionEuropeActive mutual fundGrid, storage, efficiency sub-themes (Pictet AM)
iShares Global Clean Energy (ICLN)USETFLiquid US-listed clean energy exposure (iShares)
Invesco WilderHill Clean Energy (PBW)USETFHigh-beta clean energy equities (Invesco)
KraneShares Global Carbon Strategy (KRBN)US/GlobalETFCarbon allowances futures exposure (KraneShares)
{{INFOGRAPHIC_IMAGE}}
Risks, Policy Tailwinds, and 2026 Playbook Volatility remains a feature of clean energy equities, underscoring the need for diversified exposure and attention to index methodologies and constituent weights. Carbon markets carry policy and liquidity risks, yet they can diversify climate allocations; managers highlighted this balance in late-2025 product communications and factsheets ahead of 2026 (KraneShares KRBN; iShares ICLN). On the positive side, system-level drivers—grid modernization, storage scale-up, and efficiency—continue to draw capital, and Paris-aligned index design offers disciplined decarbonization pathways. For institutionally oriented portfolios, Asia and UAE platforms add differentiated access to transition assets with regional policy support and co-investment options (GenZero; Masdar Green REIT). This builds on broader Climate Tech trends. FAQs { "question": "Which climate funds offer the most diversified exposure for 2026?", "answer": "Diversified exposure typically comes from broad clean energy and Paris-aligned index funds. In Europe, iShares Global Clean Energy UCITS (INRG) and Amundi’s MSCI Climate Paris Aligned UCITS range balance holdings across renewables, grid, and efficiency with transparent methodologies. In the US, iShares ICLN provides scale and liquidity, while KRBN adds diversification via carbon allowance futures. Combining one clean energy equity ETF with a Paris-aligned index and a carbon strategy can balance sector and policy risks for 2026 allocations." } { "question": "How do Paris-Aligned Benchmark (PAB) funds differ from traditional ESG funds?", "answer": "PAB funds follow strict decarbonization rules baked into the index, including an immediate emissions intensity reduction and a year-on-year decarbonization trajectory. They typically exclude certain fossil fuel activities and tilt toward companies on credible net-zero pathways. This is more prescriptive than many generic ESG funds, which may rely on composite scores without explicit alignment to the Paris Agreement. Amundi’s PAB UCITS range and MSCI Climate Indexes documentation outline these differences and the mechanics behind the screens and tilts." } { "question": "What role do carbon allowance ETFs like KRBN play in a climate portfolio?", "answer": "Carbon allowance ETFs provide exposure to regulated cap-and-trade markets, which can move differently from equity markets and provide a policy-driven return stream. KRBN, for example, accesses futures linked to global carbon markets, offering a hedge against transition risk and potential price appreciation as caps tighten. This can help reduce correlation with equities while maintaining climate alignment. Investors should review liquidity, roll costs, and jurisdictional policy developments discussed in recent product notes." } { "question": "Are there credible options for climate investing in Asia and the UAE?", "answer": "Yes. For more on [related esg developments](/forecasting-esg-funds-performance-in-2026-with-ai-5-trends-in-esg-investing-07-12-2025). In Asia, Temasek’s GenZero platform invests across technology, nature-based solutions, and carbon markets, with active portfolio updates. In the UAE, Masdar Green REIT focuses on certified green real estate aligned with regional efficiency standards. These platforms complement listed ETFs by offering access to transition assets and regional policy tailwinds. Qualified or professional investor status may be required, so check eligibility and disclosures before allocating capital." } { "question": "What are the key risks for climate funds heading into 2026?", "answer": "Key risks include policy and subsidy changes, supply-chain pressures, and rate sensitivity—especially for capital-intensive projects linked to clean energy equities. Carbon markets also face regulatory and liquidity risks that can impact pricing and volatility. Mitigation approaches include diversification across themes, adding Paris-aligned index exposure, and incorporating carbon allowances with measured sizing. Reviewing the latest manager factsheets and regulatory updates helps align portfolios with evolving market and policy conditions." } References

About the Author

JP

James Park

AI & Emerging Tech Reporter

James covers AI, agentic AI systems, gaming innovation, smart farming, telecommunications, and AI in film production. Technology analyst focused on startup ecosystems.

About Our Mission Editorial Guidelines Corrections Policy Contact

Frequently Asked Questions

Which climate funds offer the most diversified exposure for 2026?

Diversified exposure typically comes from broad clean energy and Paris-aligned index funds. In Europe, iShares Global Clean Energy UCITS (INRG) and Amundi’s MSCI Climate Paris Aligned UCITS range balance holdings across renewables, grid, and efficiency with transparent methodologies. In the US, iShares ICLN provides scale and liquidity, while KRBN adds diversification via carbon allowance futures. Combining one clean energy equity ETF with a Paris-aligned index and a carbon strategy can balance sector and policy risks for 2026 allocations.

How do Paris-Aligned Benchmark (PAB) funds differ from traditional ESG funds?

PAB funds follow strict decarbonization rules baked into the index, including an immediate emissions intensity reduction and a year-on-year decarbonization trajectory. They typically exclude certain fossil fuel activities and tilt toward companies on credible net-zero pathways. This is more prescriptive than many generic ESG funds, which may rely on composite scores without explicit alignment to the Paris Agreement. Amundi’s PAB UCITS range and MSCI Climate Indexes documentation outline these differences and the mechanics behind the screens and tilts.

What role do carbon allowance ETFs like KRBN play in a climate portfolio?

Carbon allowance ETFs provide exposure to regulated cap-and-trade markets, which can move differently from equity markets and provide a policy-driven return stream. KRBN, for example, accesses futures linked to global carbon markets, offering a hedge against transition risk and potential price appreciation as caps tighten. This can help reduce correlation with equities while maintaining climate alignment. Investors should review liquidity, roll costs, and jurisdictional policy developments discussed in recent product notes.

Are there credible options for climate investing in Asia and the UAE?

Yes. In Asia, Temasek’s GenZero platform invests across technology, nature-based solutions, and carbon markets, with active portfolio updates. In the UAE, Masdar Green REIT focuses on certified green real estate aligned with regional efficiency standards. These platforms complement listed ETFs by offering access to transition assets and regional policy tailwinds. Qualified or professional investor status may be required, so check eligibility and disclosures before allocating capital.

What are the key risks for climate funds heading into 2026?

Key risks include policy and subsidy changes, supply-chain pressures, and rate sensitivity—especially for capital-intensive projects linked to clean energy equities. Carbon markets also face regulatory and liquidity risks that can impact pricing and volatility. Mitigation approaches include diversification across themes, adding Paris-aligned index exposure, and incorporating carbon allowances with measured sizing. Reviewing the latest manager factsheets and regulatory updates helps align portfolios with evolving market and policy conditions.