Sustainable investments, including through ESG funds, are gaining traction with investors around the world, says Morningstar, describing them as a key trend for 2025. (ESG funds are investment funds that consider environmental, social and governance factors when selecting companies for investment.)
"Because the global warming crisis has intensified and has a widespread impact on everyone, businesses need to quickly adapt and find funding sources to cope with growing risks, while grabbing opportunities in green sectors," said the US-based financial services firm.
The highlighted sustainable investment trends for 2025 and the foreseeable future: environmental sustainability; social responsibility; corporate governance; investments geared towards adapting to a low-carbon economy; sustainability-focused debt instruments; the evolving landscape of ESG funds; biodiversity finance and the ethical considerations of artificial intelligence. Both private and political sectors are calling on regulators to prioritise the significance and value of ESG principles.
In contrast, in the US Donald Trump's administration is expected to roll back ESG-related initiatives. These potential actions, including exiting the Paris Agreement, reducing or eliminating clean energy subsidies, and the Securities and Exchange Commission repealing rules on greenhouse gas emissions and climate risk disclosures, pose challenges to the transition towards a low-carbon economy and sustainable investment strategies.
Many other countries are advancing climate and sustainability disclosure efforts, with frameworks such as those developed by the International Sustainability Standards Board gaining prominence. Morningstar also predicts an increase in green bond issuance dedicated to environmentally friendly initiatives and advancing the transition to a green society.
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February 27, 2025
