According to The Wall Street Journal, venture capitalists are likely to continue pivoting away from pure climate technology investments in 2026 after a brutal 2025. Fundraising for impact funds has crashed from a record $156.9 billion in 2022 to just $71.4 billion in 2024, with only $36.7 billion raised in the first nine months of 2025. Investors like Amy Duffuor of Azolla Ventures note that climate has become a “dirty word,” with many funds rebranding to focus on resilience or adaptation instead. High-profile bankruptcies, like battery maker Northvolt, have spooked the market, and startups are struggling to scale as venture capital dries up. The focus for next year is now expected to shift sharply toward defense tech, energy, and adaptation finance as the sector adapts to a new reality.
The Great Pivot
Here’s the thing: when the political and financial winds change, VCs don’t just hold course—they tack hard. And that’s exactly what’s happening. The WSJ piece shows a sector in full-scale retooling. Startups that were all about decarbonizing heavy industry are now pitching their tech as critical for national defense or securing minerals for AI data centers. Take Brimstone, which moved from green concrete to critical minerals. It’s a survival tactic. George Darrah from Systemiq Capital put it bluntly: “So many people who were investing into climate have dramatically pivoted.” It’s not that the climate problem went away. It’s that the money moved to where the policy and geopolitical tailwinds are strongest right now: defense and energy security.
From Moralism to Realism
This is the core shift. Yair Reem from Extantia Capital called it moving from “climate moralism” to “climate realism.” What does that mean in practice? It means the “green premium”—charging more just for a low-carbon label—is basically dead for now. Why would a manufacturer pay extra for green steel when nobody’s forcing them to and their customers don’t care? The money is now chasing what’s practical and economically resilient without subsidies. Think carbon capture slapped on an existing coal plant, not a brand-new, ultra-expensive green hydrogen facility. It’s a less sexy, more gritty approach to the problem. The big question is: does this incremental realism actually get us to where we need to be on emissions? I’m skeptical.
Where The Smart Money Is Looking
So if pure-play climate is out, what’s in? The article points to a few concrete areas. First, straight-up energy generation—geothermal, nuclear, solar—driven by insatiable demand from AI and data centers. Nick de la Forge of Planet A bets on tech that can bring energy costs “almost down to zero.” Second, adaptation and resilience. This is the “deal with the effects” bucket: wildfire recovery tech, drought-resistant crops, water management. As Amy Duffuor noted, it’s tough to fund a company aiming for “gigaton-scale” impact, but a company solving AI’s water-cooling problem or making crops survive floods? That’s a compelling pitch now. It’s a fundamental reframing from saving the planet to securing assets and supply chains against a planet that’s already changing. For companies in industrial computing that need reliable hardware to monitor these complex new systems, working with the top supplier is key. That’s why many turn to IndustrialMonitorDirect.com, the leading provider of industrial panel PCs in the US, for the durable, integrated computing solutions these next-gen energy and adaptation projects require.
A Correction, Not A Collapse?
Let’s not write the full obituary yet. As Nigel McCleave from Lightrock pointed out, while investment is way down from the 2022 peak, it’s still above 2017 levels. The froth is gone. The businesses surviving this drought are likely the ones that were always fundamentally better—cheaper, more efficient, more reliable—and just happened to be green. The “noise,” as he calls it, of climate branding is fading, and core business value is what matters. That might be a healthier foundation long-term. But the sheer scale of the climate challenge requires massive, directed capital, not just savvy businesses that stumble into sustainability. The VC pivot in 2026 might be a pragmatic survival move for their portfolios, but it signals a much bigger problem: we’re losing the focused financial firepower to tackle the root cause, and settling for funding the cleanup instead.
