The green transition: what role do institutional investors and private equity play?
Private equity firms and institutional investors play a key role in bringing about the transition. But Italia has a long way to go
Institutional investors, particularly pension funds, are among the most suitable entities for investing in private equity and venture capital and for supporting innovative companies that develop solutions for the sustainable transition. The duration of their liabilities enables them to finance projects with long payback periods and less liquid investments. For this capital to support the transition, it is important that ESG criteria are effectively integrated into investment strategies: from the selection of companies to the management of investments, with sustainability targets that are measurable and verifiable over time.
The topic was the focus of the webinar ‘Investing in sustainable development: opportunities and challenges from venture capital to private equity’, organised by the Forum for Sustainable Finance in collaboration with CDP as part of the SRI Weeks. “We are thinking in terms of very long-term horizons: 30, 40, 50 years,” said Valerio Podda, from Enpacl’s finance department, highlighting the advantage pension fund investors have in supporting less liquid investments and projects with long payback periods.
The Italian market
The Italian venture capital market has grown, but remains underdeveloped compared with the major European economies. According to the Bank of Italy’s study ‘Capital for Growth’, published in October, in 2025 private equity and venture capital firms invested around €8 billion in Italian companies, equivalent to 0.4 per cent of GDP. Ten years earlier, the figure was just over 3 billion. In venture capital, investments rose from 76 million to 1.1 billion.
In absolute terms, however, the Italian market remains one-third the size of the French market and one-quarter the size of the British market. The figures relate to the sector as a whole, not just companies involved in the sustainable transition.
Institutional investors
Another factor holding back growth is the limited participation of institutional investors. Between 2021 and 2025, the public sector accounted for 22 per cent of capital raised by Italian private equity funds, whilst pension funds and insurance companies accounted for just 17 per cent, compared with the EU average of 20 per cent and 33 per cent in the UK.
