Sustainability Risks Become Primary Cause of Deal Collapse for Energy Infrastructure Investors

Sustainability Risks Emerge as Leading Cause of Failed Infrastructure Deals

Over half of active investors in the energy and infrastructure sector have seen deals fail multiple times specifically due to sustainability pitfalls, according to a new study.The 2025 Investor Sentiment Report by global risk intelligence firm S- RM surveyed 150 investors, finding that 53 cited sustainability issues as the direct reason for deal collaps. 

This positions sustainability as the single biggest cause of failed deals, ranking ahead of geopolitical pitfalls (40) and warrants- related pitfalls (36). The findings punctuate a critical shift where environmental, social, and governance (ESG) factors are no longer just a consideration but a decisive element in deal success or failure.

Geopolitics Tops Decision Influence

The report draws a clear distinction between the factors that utmost influence investment opinions and those that directly beget deals to collapse. While sustainability is the leading cause of deal failure, a majority of investors (75%) stated that geopolitical risks has the biggest overall impact on their deal-making decisions. 

Sustainability pitfalls were the second-most influential factor, cited by 73 of respondents, followed closely by regulatory risk (72%) and cyber security (66%).This indicates investors are navigating a complex matrix of risks, where geopolitical concerns may discourage initial investment interest, but sustainability failings are frequently the definitive excrescence that terminates advanced deals.

Resource Management and Compliance

When asked to identify the specific sustainability issues affecting their investments, resource operation was the most prominent concern. This area, which includes materials, water, waste, and pollution, was cited by 57% of investors.

Just under half (49%) pointed to environmental compliance and regulatory compliance as a crucial threat. Other significant factors included climate change adaption and mitigation( 41), energy use and effectiveness( 37), and biodiversity impacts( 27). According to a leading media house, this detailed breakdown shows investors are moving beyond general climate issues to scrutinise functional and regulatory specifics.

Positive Long- Term Sentiment

Despite the high prevalence of deal defeats, the report reveals a strong turnabout of sanguinity about the sector's future. A promising of 75% of surveyed investors view energy and infrastructure sector as an attractive long- term investment opportunity. 

Ian Massey, Head of Corporate Intelligence for EMEA at S- RM, reflected that sustainability pitfalls are now "central to deal success." He noted that these challenges punctuate areas where strategic planning can produce a competitive advantage. Investors who integrate these considerations beforehand are more deposited to secure value in a promising sector.

Looking ahead, investors anticipate sustainability factors to remain important, with 37 anticipating these pitfalls will increase over the coming three years and 35% expect them to remain at current levels.This suggests that rigorous due diligence on sustainability will come a non-negotiable standard for successful investing in the infrastructure sector.