Sustainable investing growth, drivers, issues and strategies

Data suggests growth in sustainable investing priorities in the near-term

The data suggests both individuals and their organizations anticipate maintaining and/or growing their sustainable investing priorities in the near-term. This sentiment also aligns with what US SIF has been hearing in conversations with our network. Despite the politicization of the sector, retail and institutional clients are still seeking sustainable investing solutions. This aligns with other surveys in the market which indicate 88% of investors globally are interested in sustainable investing and seek to have their investments deliver positive environmental and social impact. This trend is particularly evident among the younger generation with almost all of Gen Z and Millennial investors saying they are interested in sustainable investing.

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External events shape investor sentiment and allocation

Investors in 2025 are operating against a backdrop of heightened geopolitical tension, evolving regulatory frameworks, and increasing climate and social risks. These forces continue to influence how capital markets assess both opportunity and exposure. Understanding how external events shape investor sentiment and allocation decisions provides critical insight into the resilience and the direction of travel of sustainable investing

• Climate and Nature-Related Risks Drive Allocation – Factors such as the implications of climate change (52% increased investment), loss of biodiversity (34%), and catastrophic climate events (38%) remain top catalysts for sustainable capital flows. Despite near term backlash, the underlying thesis of climate and nature as material financial risks is solidifying. This supports ongoing capital reallocation toward climate-aligned infrastructure, energy transition, and biodiversity-linked products.

• Political Polarization Has Moderated, Not Reversed, ESG Activity – Responses to political environment (22% increased; 16% decreased) and anti-ESG attacks (19% increased; 13% decreased) suggest that while the political narrative remains divisive, its practical impact on investment allocation has been limited. Investors have largely reframed ESG under risk management and financial materiality rather than abandoning it.

• Stewardship and Governance Evolving Under Scrutiny – The relatively muted impact from greenwashing and greenhushing claims (both over 80% no effect) shows that the market has internalized reputational risk but continues engagement through procedural rigor rather than withdrawal. Client-driven customized investing stands out: 41% reported increased activity (and only 3% decreased activity) underscoring the rise of bespoke ESG portfolios and values-aligned mandates.

• Emerging Strategic Themes: AI, Biodiversity, Indigenous Peoples’ Rights – It is notable that 23% of respondents said AI increased their sustainable investment activity (and 75% maintained). AI as an investor theme recognizes technology’s dual role as both an operational efficiency tool (e.g., for ESG data analytics) and a governance risk (bias, data privacy, energy use). The inclusion of Indigenous Peoples’ rights (16% increased, 81% maintained) and migration (11% increased, 87% maintained) reflects a focus of social issues at the intersection of some of the larger sectoral trends in the extractive, energy-transition, and infrastructure sectors, as well as others.

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Use of sustainable investing strategies

ESG integration remains the mainstream default. It’s the most widely used approach (77%), and half of respondents expect to maintain it while ~38% plan to increase it and very few foresee cuts. ESG integration is now an embedded process.

Negative/exclusionary screening is also widespread (72% use this tool), interestingly, 7% plan decreases versus only 1% in 2024. While 60% expect to maintain and 17% expect to increase.

Positive/best-in class screening sits in the middle of the pack on usage (59%) with roughly 30% planning to increase it (versus 21% in 2024), 45% planning to maintain and 4% intending to decrease (versus nil in 2024).

Impact investing (60% usage) shows one of the strongest growth runways: About 46% expect to increase (versus 36% in 2024) reflecting focus on outcomes and positive impact alongside investment returns.

Sustainability-themed investing (61% usage) is on a similar trajectory: Roughly 43% plan to increase (versus 36% in 2024), reflecting momentum behind climate transition, nature/ biodiversity, circular economy and other targeted themes.

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For more information and download the 2025 Trends Report here.