The Future of Sustainable Investing: Profit Meets Responsibility

The investment landscape is undergoing a fundamental transformation. No longer viewed as a niche strategy reserved for socially conscious investors willing to sacrifice returns, sustainable investing has emerged as a dominant force reshaping global capital markets. The global ESG investing market size is projected to grow from $45.61 trillion in 2026 to $180.78 trillion by 2034, at a CAGR of 18.80% during the forecast period. The global ESG investing market size was valued at USD 39.08 trillion in 2025.

This comprehensive guide explores how sustainable investing has evolved from an idealistic concept into a practical investment strategy that delivers competitive returns while driving positive environmental and social outcomes. We examine the key trends shaping 2026, the financial instruments gaining traction, and the opportunities and challenges investors face in this rapidly evolving space.

The meaning of a “sustainable economy” is shifting. Sustainability is no longer merely a question of reducing emissions, nor a compliance exercise or a sacrifice of prosperity. It is about building a superior economic system that delivers lower costs, higher productivity, greater resilience, and improved outcomes for people and the planet. Despite the political rhetoric, 2026 will prove that the sustainability transition is continuing to unfold at unprecedented speed and scale.

Understanding the Sustainable Investing Landscape in 2026

The Scale and Scope of Today’s Market

The sustainable investing market has reached unprecedented scale, transforming from a fringe movement into a mainstream investment approach. This report provides a comprehensive understanding of the trends driving $61.7 trillion in US assets under management (AUM), including $6.6 trillion explicitly marketed as ESG or sustainability-focused investments.

The market for sustainable investing is navigating a period of pronounced divergence, where record asset levels coexist with volatile flows and stark regional contrasts. The total pool of capital remains robust, with sustainable fund assets reaching a new high of $3.92 trillion as of June 30. This figure, up 11.5% from the end of 2024, underscores a fundamental investor sophistication that persists despite short-term turbulence.

Regional Dynamics: Europe Leads, Asia Rises

Europe dominated the ESG Investing market with a market share of 44.00% in 2025. European investors remain firmly committed to sustainability principles, with institutional investors scaling rather than reducing their climate commitments.

European investors remain firmly committed to sustainability, and climate remains their top priority. Institutional investors including pension funds, insurers, and sovereign wealth funds are not only maintaining climate commitments but scaling them. One recent survey shows 58% of UK and European asset managers plan to increase impact allocations in the next year, with none intending to reduce them.

From 2026, China, Hong Kong, Singapore and Japan will introduce mandatory ESG reporting aligned with the International Sustainability Standards Board (ISSB), locking sustainability disclosure into economies that account for a rising share of global GDP, trade and capital flows.

Investment Strategies Driving the Market

ESG integration remains the dominant strategy, used by 77% of respondents. Many expect to increase their use of thematic and impact investing, while negative screening remains widely adopted. The overall pattern suggests a diversified mix of strategies that investors adjust depending on market context.

Use of the UN Sustainable Development Goals continues to grow, with 50% of respondents incorporating them into their frameworks, up from 43% last year. Climate action, clean energy, economic growth, clean water and gender equality remain the top areas of focus. Many investors describe the SDGs as a practical guide for identifying opportunities and communicating investment aims.

Key Trends Shaping Sustainable Investing in 2026

Climate Transition and Adaptation Take Center Stage

Despite the negative headlines and some pullbacks, climate change is set to rise higher on investors’ agendas in 2026. The focus is expected to remain on climate transition, while increased attention will be paid to physical climate risks and adaptation. The key challenge for investors will remain assessing the credibility of companies’ emissions reduction targets and transition plans.

In 2026, the dominant story is a strategic pivot from long-term decarbonization ideals to near-term risk management. This shift is not a retreat from climate action, but a pragmatic recalibration driven by tangible physical and financial threats.

Recalibration of climate coalitions intensified stewardship rather than retreat and corporates prioritized adaptation. Clean energy bottlenecks are shifting from capacity additions to system integration as clean tech scales up, climate adaptation is becoming equally important as transition.

The Maturation of Green and Sustainable Bonds

The sustainable bond market has become a cornerstone of responsible investing, providing investors with fixed income instruments that fund environmental and social projects.

In line with 2025, we expect 2026 to reflect the continued maturation of the green, social, sustainability, and sustainability-linked bond market, now exceeding $6 trillion.

Transition-labelled bonds are anticipated to emerge as the fastest-growing segment of the sustainable bond market in 2026, driven by demand for instruments to finance decarbonization strategies in hard-to-abate sectors and the availability of new standards to define eligible investments. Overall, the report forecasts the issuance of labelled sustainable bonds to remain roughly flat year-over-year at $900 billion.

By bond type, the report forecasts that green bonds will continue to dominate the market, representing nearly 60% of issuance at $530 billion, and roughly flat with last year, followed by sustainability bonds at $190 billion, social bonds at $155 billion, and $40 billion for transition bonds.

Green bonds finance projects like renewable energy, green buildings, and low carbon transport, offering similar risk profiles to conventional bonds but with added transparency and impact reporting. The market has grown from €30bn a decade ago to €1.9trn today. It has grown into a global universe, with breadth and depth in terms of sectors and issuers. The broader green, social, and sustainability (GSS) bond market now rivals the euro investment-grade credit sector at €3trn, with green bonds as its cornerstone.

Artificial Intelligence: Catalyst and Concern

Technological advancement brings risks and opportunities. While responsible development of artificial intelligence (AI) and stronger cyber resilience are important, AI can be a powerful enabler of sustainability-related solutions, offering scalable tools to tackle environmental challenges. It can also help investors and companies embed environmental, social and governance (ESG) insights into their decision making, enhance transparency and identify long-term sustainable value.

AI is acting as a catalyst across sustainability transitions. Artificial intelligence is improving efficiency and predictability in agriculture, materials, energy grids, healthcare, and R&D, reinforcing long-term structural shifts. Electrification and innovation are reshaping economic resilience. Predictable renewable power, land-efficient production, and preventive healthcare models are redefining competitiveness, resource use, and long-term growth prospects.

AI is improving ESG analysis but creating labour risks. 2026 will also crystallize AI regulatory fault lines, such as ethics and regional divergence, forcing investors to shift capital toward socially and economically useful use cases.

The Energy Transition Accelerates

Global energy transition will continue to grow rapidly from renewables to energy efficiency. Subsidy changes in China and US will be felt, but growth is expected to continue given underlying electricity demand, low cost and speed/scalability.

Around the world, grid-scale battery installations surged, a trend set to be supported by major US and EU investment to secure supplies of critical minerals and ‘energy metals’, including plans to boost rates of recovery, recycling, and reuse. The shift from politics to economics has fundamentally altered the sustainable investment landscape. In 2026, the transition will accelerate, as sustainable technologies prove themselves cheaper, simpler, and functionally superior to incumbent technologies.

The Renewable Energy Investment Opportunity

Market Performance and Growth Trajectory

Following a major rebound in 2025, renewable energy stocks are firmly back on investors’ radar. Alternative energy stocks outperformed global equity markets last year on improving fundamentals, easing financing pressure and accelerating electricity demand.

The Morningstar Global Renewable Energy Index posted an annual gain of 10.0% in 2025 in euro terms, compared with 8.0% for the Morningstar Global TME Index and a 1.2% rise in the Morningstar Global Energy Index. That was a welcome turnaround for renewable energy stocks after four years of rising interest rates, supply-chain disruptions and policy uncertainty weighed on the sector.

Driving Forces Behind Renewable Growth

US electricity demand growth will at least quadruple in 2026, driven by AI data centers and the electrification of the economy.

According to the U.S. Energy Information Administration (EIA), the share of U.S. electricity generation from renewables is projected to increase from 22% in 2024 to 24% in 2025 and reach 25% in 2026, driven by continued growth in solar capacity.

According to the International Energy Agency, renewable energy is set to surpass coal as the world’s largest source of electricity as early as next year. By 2026, renewables are projected to account for 36% of global power generation compared with coal’s 32% share, largely due to the rapid expansion of solar and wind output over recent years.

According to the Deloitte 2026 Renewable Energy Industry Outlook report, annual additions of solar, wind, and storage capacity between 2026 and 2030 are expected to range from 30 GW to 66 GW per year. By October 2025, the United States had 37.4 GW of operating battery storage capacity, reflecting a 32% increase year to date, with an additional 19 GW under construction through 2026 and a robust pipeline of 187 GW expected by 2030.

Top Renewable Energy Investment Opportunities

NextEra Energy is one of the world’s largest producers of wind and solar energy. It generates power at its Florida utilities and its energy resources segment, the latter of which sells electricity under PPAs to other utilities and large corporate buyers. Few companies are betting bigger on renewable energy than NextEra Energy. The utility’s ambitious Real Zero plan aims to eliminate carbon emissions from its operations by 2045. It plans to significantly expand its solar energy and storage capacity while replacing natural gas in its power plants with green hydrogen and renewable natural gas.

NextEra Energy expects to be able to add 36.5-46.5 GW of new renewables in the 2024-2027 time frame to the generation portfolio via clean energy investments. The Zacks Consensus Estimate for NEE’s 2026 earnings implies a 7.8% improvement from the prior year’s estimated earnings, while that for its 2026 sales reflects a 17.7% increase. The stock has gained 13.4% in the past six months.

Brookfield Renewable’s multiple growth catalysts underpin its expectation of delivering FFO per share growth of over 10% annually for the foreseeable future. That should support at least 5% annual increases in its nearly 4%-yielding dividend. This combination of income and growth positions the company to deliver mid-teens annualized total returns, making Brookfield a great stock to buy and hold for the long haul.

Brookfield Renewable is described as a global renewable power producer that sells most output under long-term, fixed-rate PPAs. About 90% of its power is cited as contracted for an average term of 13 years. Roughly 70% of revenue is cited as tied to inflation-adjusted pricing, which can help cash flow keep up when costs rise.

Why Investors Are Embracing Sustainable Strategies

Financial Performance: The Business Case

Nine of ten asset managers surveyed believe that integrating ESG into their investment strategy will improve overall returns. A majority of institutional investors, 60%, reported that ESG investing has already resulted in higher performance yields, compared to non-ESG equivalents.

ESG-focused equity portfolios often outperform or match traditional equity portfolios, particularly in volatile markets. Companies with strong ESG scores tend to manage risks better, have more loyal customers, and showcase stronger operational efficiency, all leading to higher valuations and stable returns.

Primary Motivations for Sustainable Investment

The primary drivers behind sustainability integration are firmly rooted in investment fundamentals. Respondents highlighted client demand, risk management and long-term returns as leading motivations, each increasing year-on-year. While delivering positive impact remains important, fewer respondents prioritised it compared with 2024, suggesting a shift toward a more financial-materiality-led narrative.

Recent investor surveys point to a bright future for sustainable investing. According to one conducted by the Morgan Stanley Institute for Sustainable Investing, 88% of global individual investors are interested in sustainable investing. The younger generation shows the greatest interest, signaling that sustainability will become an even stronger focus as their financial influence grows. Similarly, 86% of asset owners expect to increase allocations to sustainable investments in the next two years.

Institutional Investor Commitment

In 2026, the institutional investors segment dominated the market share 47.28%. Institutional investors, including pension funds, insurance companies, endowments, and sovereign wealth funds, are significantly increasing their exposure to ESG investing as part of a broader shift toward sustainable, resilient, and modern investment strategies.

Sustainable assets under management (AUM) and investor sentiment show resilience and optimism amid political headwinds. Importantly, sentiment across the industry remains optimistic: nearly 70% of respondents say they remain committed to sustainability’s long-term future.

Navigating the Evolving Regulatory Environment

Global Regulatory Divergence

Transition is often used as a catch-all for sustainable change, but in 2026 sharper definitions will drive progress. Greater regulatory clarity under SFDR5 around what qualifies as transition finance, combined with rising client interest and the need to position transition financing as a distinct asset class, will be key to accelerating capital flows.

The EU Omnibus simplification package will exempt a significant share of companies from CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD) obligations. But while legal requirements are being scaled back, stakeholder expectations are not. Investors, lenders and business partners continue to demand decision-grade sustainability data, and firms that have already invested in reporting systems understand the value: stronger risk management, clearer governance and better-informed strategy. For those without that foundation, the temptation to pause may prove costly.

The US Political Landscape

President Donald Trump’s return to the White House set the stage for a year of deregulation, exits from landmark climate agreements, reversal of sustainable initiatives and more. While federal agencies, including the Securities and Exchange Commission, worked to overturn, withdraw or stop defending Biden-era policies focused on ESG, the evolving political environment has also caused companies to recalibrate how they communicate climate goals and objectives.

Businesses have decided to largely maintain the course on sustainability, amid the political backlash. Last year also saw a growing number of the world’s largest companies commit to reaching net-zero, and 41% of the world’s 2,000 largest companies have net-zero targets for their entire supply chain, according to a recent Accenture report.

Adapting to Political Realities

While some firms have refined their messaging, emphasizing fiduciary duty and financial materiality, others have continued with little or no change in strategy. The resulting environment is one of recalibration rather than retreat: investors remain committed to integrating sustainability considerations but are adapting language, stewardship protocols, and disclosure framing to align with evolving legal and political realities.

Communication practices around sustainability are evolving. Although nearly half of respondents made no changes, a growing number are adjusting their terminology to be more neutral, focusing on fiduciary duty, risk and value creation rather than politicised acronyms. Some firms have formalised updated definitions or policies that reinforce their long-term approach.

Critical Minerals and Supply Chain Considerations

The Importance of Strategic Materials

Another key consideration in 2026 will be the supply of critical minerals such as lithium, cobalt, nickel, and rare-earth elements which currently lags the rising demand. National security concerns, particularly around dependence on China, will continue to shape investment flows into mining, processing, and alternative sourcing strategies.

Asia’s Central Role

Asia will be at the epicentre of climate and sustainability in 2026, with focus on China’s delivery of its emission cutting pledge and dominant position in the clean energy market.

We see continued momentum of the energy transition, areas such as nuclear and grid infrastructure gaining importance and increasing impact on conventional markets such as oil. Despite the elevated status of sustainability as a geopolitical topic in Europe and North America, we see Asia as the region where the most important things are happening, from the continued growth of China as a clean energy super power, to Japan’s ambitious transition program and India’s increasingly pivotal importance on the future direction of global emissions.

The Credibility Test: From Targets to Traction

Moving Beyond Declaration Mode

For much of the past decade, corporate sustainability has operated in declaration mode: set an ambitious target, publish a roadmap, wait for policy to catch up. That approach has reached its limits. While COP continued to advance the multilateral agenda, for companies it reinforced a harder truth: credibility now rests on demonstrable progress, not stated intent.

Investors, regulators and customers are no longer asking what companies plan to do; they are asking what has actually changed. In conversations with corporate sustainability leaders, financial institutions, and policymakers, the mood feels unmistakably different. There is more realism about what decarbonisation requires, greater scrutiny of claims, and for those doing the work, a certain weariness at how slowly ambition is turning into action. The next phase will be defined not by targets, but by traction.

Enhanced Pricing and Risk Integration

Despite the high-profile politicisation and volatility surrounding sustainability, clients are increasingly exploring how best to price evolving risks. In the year ahead, significant progress is expected in the pricing and integration of these risks into investment decisions. This shift will be driven by several factors: enhanced modelling capabilities, growth in systematic and quantitative investment strategies, and improved attribution of financial impacts, including accountability for harm.

Building a Sustainable Investment Portfolio

Understanding Different ESG Approaches

There are multiple approaches to sustainable investing, each offering different benefits and considerations:

ESG Integration remains the most widely adopted approach, involving the systematic consideration of environmental, social, and governance factors alongside traditional financial analysis. This method recognizes that ESG factors can materially impact a company’s financial performance and risk profile.

Thematic Investing focuses on specific sustainability themes such as clean energy, water management, sustainable agriculture, or circular economy. Thematic and impact equity funds actively direct capital towards measurable change. BNP Paribas Asset Management focuses on biodiversity, renewable energy and healthcare access: sectors with quantifiable alignment to the UN SDGs. With clear impact reporting and engaged stewardship, these funds appeal to investors who expect both performance and purpose.

Impact Investing seeks to generate measurable positive social or environmental outcomes alongside financial returns. Generation Investment Management channels growth-stage capital into clean tech, circular economy start-ups and climate-smart agriculture. The approach pairs entrepreneurial dynamism with measurable impact, making venture capital a frontline tool for the sustainability transition.

The Rise of Retail Participation

The retail investors segment is expected to grow with the highest CAGR during the forecast period. Retail investors are increasingly investing in ESG-related funds due to regulatory trends and government incentives such as green tax benefits or ESG-linked retirement schemes.

2026 regulatory alignment (SFDR 2.0, MiFID II, IDD) could unlock strong retail demand now held back by advisory frictions, unclear product labels and complex disclosure.

Diversification Across Asset Classes

This leads to a surge in demand for ESG-aligned financial products, including green bonds, sustainability-linked loans, ESG equity indices, and impact investing. Market players are launching a wide range of sustainable investments and integrating ESG criteria into their investment strategies. For example, BlackRock and Vanguard have significantly expanded their ESG fund offerings to cater to the growing demand.

The bonds segment is estimated to grow with the highest CAGR during the forecast period. The growing demand for ESG bonds, including green, social, and sustainability-linked bonds, is being driven by the global transition toward more sustainable economies, increasing regulatory pressure, and investor preference for responsible finance.

Sector Spotlights for Sustainable Investors

Financial Services Leading the Way

Sustainable multi-asset and balanced strategies apply ESG filters across all holdings, proving that sustainability is not a style but a structural principle in modern asset management. Aviva Investors uses a holistic approach that embeds climate and governance metrics across equities, bonds, and alternatives. These diversified portfolios deliver consistent returns while remaining future-fit.

Socially Responsible Investing Becomes Mainstream

SRI incorporates ethics into every investment decision. Global investment giant Triodos Investment Management has built its reputation by championing fairness, sustainability and good governance across markets. SRI portfolios exclude harmful industries while championing positive actors in agriculture, housing, and education. Once niche, SRI now represents a core philosophy for mainstream funds, blending moral clarity with credible returns.

Healthcare and Food Systems

Beyond climate, critical areas such as healthcare and food have seen cost pressures, regulatory challenge and poor investment performance in recent years. As large, geopolitically essential sectors with strong exposure to demographic drivers and a lot of underlying innovation they should remain in focus for sustainable investors in 2026.

The Technology Factor in Sustainable Investing

Data Centers and Clean Energy Demand

The fast expansion of data centers, fueled by cloud computing and artificial intelligence, requires substantial and reliable electricity supplies, generating additional demand that renewables are well suited to meet. Declining installation costs for utility scale solar, wind, and battery storage projects, have also made renewable projects more economically attractive and competitive with conventional power sources. Growing corporate investments and long-term power purchase agreements further strengthen the sector by providing stable revenue streams and financing certainty. Together, these factors create a favorable environment for sustained and solid growth in renewable energy throughout 2026.

Hyperscalers are driving unprecedented demand for firm, low-carbon power. The United States hosts 90% of hyperscalers’ global carbon-free energy contracts, with renewables supplying 78% and nuclear providing the rest. Battery storage is the fastest bridge to 24/7 clean power, as clean baseload options like nuclear, hydro, enhanced geothermal, and natural gas with carbon capture take years to develop.

Digital Infrastructure and Sustainable Debt

Digital infrastructure will support sustainable debt issuance, with the rapid growth of data centers creating significant financing opportunities, with developers increasingly looking to address investor scrutiny of the energy and water impact of the projects.

Data centres are one clear example of the fast development in digital infrastructure, which is set to play an even bigger role in infrastructure projects in 2026. This shift will influence the scale, style and timelines of infrastructure financing, creating diversification opportunities and an attractive long-term risk-reward profile for investors.

Natural Capital and Biodiversity

The Next Frontier in Sustainable Investing

Natural-capital investment must roughly triple by 2030, and both real asset strategies and market instruments like green bonds and debt-for-nature swaps are needed for private-capital scaling.

Recent years have seen investors operate in an environment shaped by conflicts, inflationary pressures, extreme weather events, and growing digital disruption. These events, coupled with the longer-term sustainability themes shaping our decade including climate change, biodiversity loss, and rising inequality are redefining risks in capital markets and placing long-term investment resilience under scrutiny.

Social and Human Capital Considerations

Demographic shifts, inequality, pressure on human capital, human rights and public health are driving demand for more inclusive and resilient systems.

Risks and Challenges in Sustainable Investing

Greenwashing Concerns

ESG funds reach $3 trillion but face increased regulatory scrutiny. The growing concern about greenwashing has led to increased regulatory attention and stricter standards for sustainability claims.

Policy Uncertainty

Key drivers supporting sustainable bond market issuance in the coming year include a focus on sustainable financing to address material climate mitigation and adaptation investment gaps, which will continue to be offset by political headwinds in some markets.

Market Volatility

Alternative energy stocks have long been prone to boom-and-bust cycles, often driven by changes in interest rates and policy frameworks.

Nevertheless, for Pictet’s Chollet, investors still underestimate the scale of the opportunity. “Stocks tied to the energy transition are not just cyclical growth trades. There is a significant amount of secular growth still ahead.” For renewable energy stocks, the easy part of the rebound may be over. What lies ahead in 2026 looks more like a test of discipline, fundamentals and selectivity.

Strategic Outlook: Positioning for 2026 and Beyond

The Shift from Politics to Economics

Sustainable investing is shifting from politics to economics. As policy support weakens, the transition is increasingly driven by cost competitiveness, scalability, and operational advantages rather than regulation or ideology. Modular technologies are accelerating system-wide change.

Long-Term Investment Case

Despite policy shifts in the US, Europe continues to lead in sustainable investing, offering a strong pipeline of opportunities with attractive risk-return profiles, and European governments, corporates, and investors are staying the course. For European investors, sustainability is not a trend; it’s a strategic imperative. And with Asia’s growing role in driving the energy transition, there are two clear regions driving this focus.

As the physical impacts of climate change become more apparent, the urgency to act will increase. While the transition to a low carbon economy faces some political and regulatory headwinds, the technological and societal shifts underlying the transition will persist and continue to demand investors’ attention.

Investor Allocations

Most firms plan to maintain their sustainable investing allocations, while a third anticipate expanding them. Only a small minority expect any contraction.

Practical Steps for Building a Sustainable Portfolio

Start with Clear Objectives

Before investing, determine what aspects of sustainability matter most to you. Whether your priority is climate action, social equity, corporate governance, or a combination of factors, clarity on your goals will guide your investment decisions.

Consider Multiple Investment Vehicles

Sustainable investing offers various entry points:

1. Green Bonds: Green bonds finance projects like renewable energy, green buildings, and low carbon transport, offering similar risk profiles to conventional bonds but with added transparency and impact reporting.
2. Renewable Energy Stocks: Companies like NextEra Energy and Brookfield Renewable offer exposure to the energy transition with dividend income.
3. ESG-Focused Funds: Mutual funds and ETFs provide diversified exposure to companies meeting specific sustainability criteria.
4. Impact Investments: Direct investments in projects or companies generating measurable positive outcomes.

Understand the Evolving Landscape

When it comes to investing, there’s one main conclusion: ESG isn’t going anywhere. The global value of ESG assets is still expected to hit somewhere between $35 and $50 trillion by 2030. In other words, the recent setbacks for ESG investing are small backflows, but the much more significant wave of overall ESG investing still exists.

Investors are likely convinced that ESG-related investments are smart, long-term bets. Many of today’s ESG pillars involve adaptation, which is essential in governance thinking and good news for investors who always want clarity on how a company will succeed in five, ten, or twenty years.

The Commercial Opportunity in Sustainability

Market Size Projections

Investments in green technologies keep jumping from record to record. The market for commercial solutions with a clear environmental purpose or solutions that are a direct response to environmental challenges, including adaptation, resilience and mitigation measures, is expected to reach $7 trillion annually by the end of the decade.

Premium Returns Justified

With the prospect of higher returns, investors surveyed are willing to pay for ESG performance. Three-quarters, 78%, say they would pay higher fees for ESG funds. Half of investors, 52%, are willing to build ESG into performance-related fees, and two-thirds of those would accept a 3-5% ESG premium.

While tensions are frequently highlighted between ESG priorities and asset managers’ fiduciary duty to maximise financial returns for investors, three-quarters of investors now consider ESG to be part of their fiduciary duties. Nearly as many, 72%, say they set ESG-related goals for their asset managers at a portfolio level.

Conclusion: The Convergence of Profit and Purpose

The future of sustainable investing represents a fundamental shift in how capital markets function. Responsible investment is moving from aspiration to execution. Expectations for stewardship, especially in Europe, continue to intensify, and there is a growing emphasis on directing capital toward climate solutions that deliver measurable, real world impact.

Sustainability in 2026 is being redefined as a core component of credit strength and operational resilience. The evolution of ESG is no longer a matter of corporate reputation; it is a direct line item on the balance sheet and a critical determinant of credit quality.

The evidence is clear: sustainable investing has evolved from a values-driven approach to a fundamental investment strategy grounded in financial materiality and risk management. The defining question for 2026 is not who has the most ambitious targets, but who is most prepared to operate in a world where risk, policy and investor expectations are moving at different speeds. In that environment, leadership will belong to the organisations that can demonstrate progress, adapt quickly and collaborate deeply across value chains. Those are the businesses that will shape what comes next.

For investors, the message is straightforward: sustainable investing is no longer optional. It represents both a prudent risk management strategy and a significant opportunity for long-term wealth creation. By aligning investment portfolios with the transition to a more sustainable economy, investors can pursue competitive returns while contributing to positive environmental and social outcomes.

Understanding the trends shaping 2026 is critical, not only for managing risk, but also for identifying new areas of growth and opportunity, in terms of capital allocation and aligning stewardship activity with the aim of addressing systemic risks in portfolios and markets.

The convergence of profit and responsibility is no longer a distant aspiration. It is the defining investment theme of our time.