Crédit Mutuel Asset Management is an asset management company of La Française, the asset management branch of Crédit Mutuel Alliance Fédérale.

Temperatures have been soaring for months, energy prices are surging, and climate diplomacy is at a standstill. Rarely has a climate COP opened against such a paradoxical backdrop. From wildfires in Europe to floods in Nepal, the year now drawing to a close has shown once again that physical risk is no longer just a projection. Meanwhile, the war in the Middle East has put energy security back at the top of the agenda. And yet, no one expects the Turkish Riviera to deliver a breakthrough on the scale of Glasgow (COP26, 2021) or Dubai (COP28, 2023).

A fossil fuel phase-out still out of reach

A fossil fuel phase-out is likely to remain out of reach. This is despite fossil fuel emissions hitting a record high in 2025, and despite the fact that the commitment made in Dubai in 2023 to transition away from fossil fuels has yet to be backed by a timetable. At Belém (COP30, 2025), the final text did not even mention fossil fuels by name, and the roadmap supported by some 80 countries was not adopted1. With multilateral progress stalled, ambition is moving elsewhere. This year, nearly 60 countries met outside the UN framework to discuss phasing out fossil fuels, and several European states, including France, have published their own roadmaps.

"35 by 35": the Turkish presidency's goal

The clearest signal for markets will come from the COP31 presidency's Action Agenda. Its flagship target is straightforward: raise the share of electricity in final energy consumption from around 20% today to 35% by 2035 ("35 by 35"). Other targets round out the agenda including a cut of at least 25% in the energy intensity of buildings and halving the growth in waste4. Together, these goals clearly map out where investment is needed: grids, storage and industrial heat, etc. For utilities and grid operators, they signal sustained long-term demand. For industry, they imply a transformation of production processes. And with fossil fuel prices at dizzying levels, electrification is also becoming a matter of energy sovereignty.

The power mix: the agenda's blind spot

This is precisely where analysis needs to make a difference. The "35 by 35" target says nothing about how the additional electricity will be generated. Yet around a third of the world's electricity still comes from coal. Electrification on the wrong footing could shift emissions or even increase them rather than reduce them. In our view, several criteria are key:

• Production mix. Higher volumes only benefit the climate if they rely on low-carbon production capacity.

• Investment plans. Is capex on grids and renewables commensurate with stated ambitions?

• Balance-sheet strength. These programs are capital-intensive and financing them must not come at the cost of a weaker financial profile.

• Trajectories. Reduction targets should be credible, validated by an independent third party and backed by detailed transition plans.

• Timing matters too. Front-loaded investment drives up debt before regulated or contracted revenues catch up. Electrification that relies on gas or coal also exposes issuers to the risk of stranded assets.

These factors matter as much for selecting portfolio companies as for engaging with them. Assessing these risks also requires a rigorous look at the role of governments and regulators. Public policy, such as subsidies and carbon taxation, and the predictability of regulatory frameworks are what secure, or undermine, the long-term risk profile of these investments.

Fewer announcements, more action

Antalya is therefore unlikely to be a COP of big announcements. It could, however, be a COP of implementation, as its presidency claims. For investors, the message is clear: there is no need to wait for policymakers to act. Through selective capital allocation and demanding engagement with companies, we have concrete levers to steer capital towards genuinely low-carbon electrification. National policies, more than negotiated texts, will set the pace of issuers' transition. At a COP short on breakthroughs, rigorous analysis becomes a climate lever in its own right.

Investing involves risks, including the risk of capital loss; please be aware of these risks. References to certain securities or financial instruments are provided for illustrative purposes only. They are not intended to promote direct investment in these instruments. 

This commentary is provided for informational purposes only. The opinions expressed by Groupe La Française are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. The information contained in this publication is based on sources considered reliable, but Groupe La Française does not guarantee that it is accurate, complete, valid, or relevant. Published by La Française Finance Services, headquartered at 128 boulevard Raspail, 75006 Paris, France, regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673, and registered with ORIAS (www.orias.fr) under no. 13007808 on November 4, 2016, a subsidiary of La Française. Crédit Mutuel Asset Management: 128 boulevard Raspail, 75006 Paris, is an asset management company authorized by the Autorité des Marchés Financiers under no. GP 97 138 and registered with ORIAS (www.orias.fr) under no. 25003045 since April 11, 2025. Public limited company with capital of €3,871,680, RCS Paris no. 388 555 021.
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1.  Despite more climate disasters, COP31 shows little hope of progress on fossil fuel deal | Malay Mail
2. Une soixantaine de pays réfléchissent à une sortie des énergies fossiles, modèle « suicidaire » qui mène à « la barbarie »
3. Adoption de la feuille de route climatique française | Ministères Transition écologique, Aménagement du Territoire, Transports, Ville et Logement
4. La présidence de la COP 31 annonce de nouveaux objectifs en matière d'électrification mondiale, de réduction des déchets et de résilience des villes ; transcription de la conférence de presse | CCNUCC
5. Les énergies renouvelables ont produit plus d’électricité que le charbon en 2025, une première