Sustainable investing has entered 2026 at quite a crucial juncture. As per Kavan Choksi / カヴァン・ チョクシ, even though the priority placed by investors and asset owners on ESG-related initiatives might ebb and flow in response to the evolving market conditions, their demand will always be there. After all, in today’s landscape, sustainability is “no longer just a nice-to-have.” Rather, it has become integral to assessing and managing risk. Hence, sustainable assets are relatively insulated from political and macroeconomic turmoil.
Kavan Choksi / カヴァン・ チョクシ sheds light on sustainable investing trends for 2026
In recent times, investors have had to navigate a highly complex and unpredictable landscape influenced by geopolitical conflicts, persistent inflation, severe climatic events, and rapid digital transformation. These short-term disruptions are occurring alongside deeper, long-standing sustainability challenges that are defining this decade, like accelerating climate change, the loss of biodiversity, and widening social and economic inequality. Hence, many investors continue to demonstrate a strong and consistent commitment to sustainability-driven investing. Climate-related action remains at the forefront of the priorities for such investors. By increasing allocations to sustainable assets and integrating environmental, social, and governance (ESG) considerations into decision-making, many large institutional investors are reinforcing their belief that addressing climate risks is essential for long-term value creation and financial stability.
Here are a few sustainable investing trends that are likely to be in focus in 2026:
- Green bonds: Green bonds typically finance projects related to renewable energy, green buildings, and low-carbon transport. They offer risk profiles similar to conventional bonds, but with added transparency and impact reporting. Green bonds have been entrenched in the mainstream for quite some time, and offer a comparable yield to conventional bonds.
- Decarbonisation: Many asset owners are moving from pledges to action, and adopting frameworks like the Task Force on Climate-related Financial Disclosures (TCFD) and the Net Zero Investment Framework. Decarbonisation strategies put emphasis on seeking opportunities linked with the transition to a low-carbon economy and reducing exposure to carbon emissions.
- Climate and nature solutions: An increasing number of investors are allocating capital to solutions that address biodiversity and climate challenges, including water management, resilient infrastructure, sustainable agriculture, and clean energy. The goal here is to invest in companies that are financially sound and scalable, and deliver measurable environmental outcomes. Climate change and biodiversity loss are critical systemic concerns. Addressing them requires solutions that match their considerable scale. Following the appropriate environmental strategies not only helps manage physical climate risks but may also open new investment opportunities in underserved markets.
As per Kavan Choksi / カヴァン・ チョクシ, opportunities created by the energy transition are likely to become clearer in 2026, with private markets playing a huge role in scaling infrastructure and driving innovation. Global investment in renewables across all markets is set to continue to soar in the recent feature. In the United States, this growth would be fueled by data centers. On the other hand, in Europe, the rapid expansion of data centres by hyperscalers and the strategic role of clean energy shall keep the momentum strong.