Sustainability-focused trends and investments are proceeding in defiance of political rhetoric and beyond policy cycles, according to index provider MSCI’s Sustainability and Climate Trends to Watch for 2026.
The MSCI ACWI IMI New Energy Filtered Index’s return in January through October 2025 was 45.33% versus 20.67% for the MSCI ACWI Investable Market Index.
Green technologies “are advancing on commercial strength rather than policy support”, Laura Nishikawa, head of sustainability and climate R&D at MSCI, says in the report.
Some trends created by current policy priorities are actually reinforcing the appeal of sustainability. MSCI says technologies like green energy and renewables are now not only cheaper than traditional rivals but also benefitting investors by decoupling from current oil market volatility.
The corollary of this is that commercially viable sustainability is rewarded – and rewarding. MSCI data shows a great performance advantage for low-carbon technologies optimised for commercial readiness – defined by cost parity, scale and large-scale deployment – versus low-carbon technologies overall.
Other data bear out these conclusions.
The S&P Global Clean Energy Transition Index rose around 50% from January to October 2025 compared to 17% for the S&P 500. Meanwhile, global new investments in renewable energy reached nearly US$400 billion in the first half of 2025 alone, according to BloombergNEF.
Unfortunately, risk and losses are driving investment commitments to sustainability as much as opportunities. Private funds, popular for real estate, infrastructure, and other physical assets, are especially exposed.
MSCI cites analysis of 1,427 private capital funds with infrastructure-related holdings showing risk from catastrophic weather events increasing dramatically. While average losses should rise only 2% if global temperatures rise three degrees Celsius by 2050, the share of assets exposed to catastrophic losses beyond 20% of their value will increase five-fold.
The risks may be worse in Asia.
According to MSCI, constituents of the MSCI AC Asia Pacific Infrastructure Index are more exposed to potential losses from severe flooding – particularly coastal flooding – than global peers. They risk losing up to 19% of their values due to severe coastal flooding events by 2050 versus an estimated 16% global losses.
MSCI surveyed 18 global asset owner portfolios with around $4 trillion of assets under management and found that around one-quarter of their total equity value is already exposed to serious physical hazards from climate change.
Insurance markets are reflecting this. Premiums for natural catastrophe and physical risks are likely to rise around 50% by 2030 alone.
All of these are financial and economic realities. Efforts by some politicians to deny them are looking like increasingly loss-making bets.
