The UK Sustainability sector continued to attract investment during the first half of 2025 despite a more uncertain global economic backdrop. While transaction activity moderated compared with previous periods, investor appetite remained strong across CleanTech, Green Energy, ESG & Sustainability Services and Human Capital Management, supported by government policy, regulatory change and continued demand for sustainable business solutions.
Polestar Corporate Finance’s Sustainability H1 2025 Sector Review examines the latest developments influencing mergers and acquisitions (M&A), private equity investment, valuation trends and transaction activity across the UK sustainability market. The report also explores regulatory developments, sustainability reporting, green investment, public market performance and notable transactions completed during H1 2025.
UK M&A activity increased modestly during H1 2025, with transaction volumes strengthening from Q1 into Q2. Corporate acquirers completed around 62% of UK transactions, while buyout activity returned to historic levels following unusually strong private equity activity during early 2024.
Within Sustainability, transaction activity reduced compared with previous periods as changing political priorities influenced investor sentiment. However, the report notes continued activity across CleanTech, ESG & Sustainability Services, Green Energy and Human Capital Management.
Regulation continues to shape investment across the sustainability sector.
During H1 2025, the UK published exposure drafts for the UK Sustainability Reporting Standards (UK SRS), introducing mandatory sustainability disclosures aligned with the International Sustainability Standards Board (ISSB). The report notes that these developments are expected to increase demand for audit, legal and advisory services.
The report also highlights continued progress under the Great British Insulation Scheme (GBIS), supporting home energy improvements, alongside DEFRA’s consultation on eliminating biodegradable waste to landfill by 2028.
Investment into sustainable technologies remained a significant theme throughout H1 2025.
The report highlights:
Demand for sustainability expertise continued to grow.
The report highlights approximately one million UK roles across ESG leadership, sustainability analytics and net-zero compliance, with growing demand for professionals combining sustainability knowledge with legal, financial and operational expertise.
Innovation also continues across ESG analytics, climate risk modelling and B-Corp reporting platforms.
Alongside sustainability policy, the report highlights wider regulatory developments affecting businesses.
These include implementation of the UK Data (Use and Access) Act 2025, increasing AI adoption across businesses, evolving privacy requirements and continued monitoring of cross-border data legislation for organisations operating internationally.
The report reviews valuation performance across several sustainability subsectors, including:
Key observations during H1 2025 include:
The report notes that sustainability transaction volumes softened during H1 2025 as changing political priorities tested investor confidence.
However, policy support continued to underpin investment across:
The report also identifies increased activity within Human Capital Management, reflecting growing recognition of social sustainability as a long-term value driver. Private equity firms continue to integrate ESG throughout portfolio companies, with many operating dedicated sustainability-focused investment strategies.
The report highlights a number of investors and strategic acquirers active across the sustainability market during H1 2025, including organisations involved in transactions across:
Examples include:
The report notes continued consolidation across fragmented sustainability markets, particularly within sustainable waste management, where acquisitions continue to support scale and operational efficiency.
The report highlights a range of notable UK transactions completed during H1 2025, including:
These transactions demonstrate continued investment across CleanTech, Green Energy, ESG & Sustainability Services and Human Capital Management businesses.
The report shows that while overall UK M&A activity strengthened during H1 2025, transaction volumes within the Sustainability sector moderated as investor sentiment responded to changing political priorities. Activity nevertheless remained strong across CleanTech, Green Energy, ESG & Sustainability Services and Human Capital Management.
The report identifies continued investment across CleanTech, Green Energy, ESG & Sustainability Services and Human Capital Management. Climate technology investment increased during H1 2025, supported by government policy, sustainability reporting requirements and growing investor demand.
Yes. The report notes that private equity firms continue to embed ESG considerations across portfolio companies, with many operating dedicated sustainability-focused investment funds. Growth equity also continues to support emerging sustainability technologies capable of delivering long-term organic growth.
The report highlights a recovery in public market valuations during the second quarter of 2025. CleanTech and Green Energy businesses continued to achieve comparatively strong revenue multiples, while Human Capital Management businesses maintained relatively stable valuations supported by recurring revenue models.
Key themes identified in the report include the introduction of UK Sustainability Reporting Standards, increased climate technology investment, continued government support for Clean Energy industries, growing demand for ESG expertise and ongoing investment into sustainability-focused technologies.
The report highlights active investors and acquirers operating across Sustainability, including Cirqlr, Zellis, Org Group, The Access Group, Diligent and UpVolt, alongside a range of completed transactions across CleanTech, Human Capital Management, ESG Services and Green Energy.
The report suggests that although political and economic uncertainty has influenced transaction volumes, government policy, regulatory developments, sustainability reporting requirements and continued investor interest continue to support long-term opportunities across the UK sustainability market.
Polestar Corporate Finance advises founders, shareholders, management teams and investors operating across the Sustainability sector on company sales, acquisitions, fundraising, management buyouts, business valuations and wider strategic corporate finance matters.
