Earth Day Collides With a US Reversal on Climate and Vexing Markets

Every year, Earth Day invites us to consider the environment and climate. That began with the health-related effects of pollution on the very first Earth Day in 1970, and then expanded widely to consider the effects of a warming planet. This year, Earth Day collides with the US’ wavering commitment to climate action, vexing markets, and outflows from sustainable funds.

At the same time, some 73% of Americans believe global warming is happening, versus 14% of those who don’t, according to a Yale study. And 64% of Americans say they are worried about its effects, incuding an increasing number of weather disasters.

Plenty of uncertainty lies ahead. Asset managers are losing their appetite for the environmental, social, and governance resolutions by which they pushed companies on climate risk during proxy voting season. As the new US administration settled in, the SEC created new barriers for shareholders seeking to engage with companies, a situation that Morningstar Sustainalytics’ director of stewardship research and policy Lindsey Stewart wrote about. At the same time, the SEC has withdrawn from forcing US companies to report on greenhouse gas emissions and climate impacts.

Nevertheless, there’s also hope for some climate-conscious investors. New York City Comptroller Brad Lander and other investors continue to wield the power of the proxy. The State of California still requires companies to disclose emissions, and the European Union already requires businesses, including many subsidiaries of US companies, to disclose the environmental impact of their businesses.

At Morningstar, we believe the financial markets have a huge role to play in mitigating climate change, and that a world grappling with global warming brings plenty of investment risks and opportunities. Recently, market volatility has tested the resilience of investment strategies. Morningstar Indexes’ Tom Kuh and Morningstar Sustainalytics’ Maggie Stafford found that sustainability benchmarks have outperformed their conventional counterparts, even during the volatility triggered by President Donald Trump’s on-again/off-again tariff policy.

For Earth Day, Morningstar Sustainalytics’ chief Ron Bundy and Sustainalytics’ head of sustainable investing research Hortense Bioy unpacked the public policy initiatives driving the world of sustainable investing in 2025.

These initiatives are also affecting the world of private markets, raising some profitability challenges and causing investors to rethink investment allocations, wrote senior strategist Hilary Wiek and senior analyst Anikka Villegas for Morningstar subsidiary PitchBook.

For our Earth Day package, we also took a look at which companies sport low ESG risk and those with coveted wide or narrow Morningstar Economic Moat Ratings. We inspected renewable energy investments and how they might fare during President Trump’s second term. And we found cheap companies that are well-placed in the climate transition.

Solving complex environmental challenges requires participation from a broad range of stakeholders, including investors. This Earth Day, you’ll find some links below for an array of relevant articles about global warming and investment, penned by Morningstar analysts and journalists. Happy reading.

Best Sustainable Companies to Own: 2025 Edition

As Market Lurched, Sustainable Stock Indexes Outperformed

Public Policy Drives Sustainable-Investing Markets in 2025

Banks Face New Pressure to Report on Clean Energy Financing

5 Cheap Stocks Leading the Low-Carbon Transition

Can Renewable Energy Stocks Prosper During Trump’s Second Term?

Environment, Climate, and Energy Remain Big Topics for Private-Markets Investors, PitchBook Analysts Say

What Is ESG Materiality, and Why Does It Matter to Investors?

Can Nuclear Energy Help Big Tech Meet Data Center Needs?

Explore These 30 Leading Water Funds and Water Stocks in the US and Europe

‘Truly Staggering’ Weather Disaster Will Occur ‘Someday, Any Day,’ Buffett Says | Morningstar

The Biggest Investment Risks May Be Outlined by the Companies You Own

Changes in SEC Guidance on Investor Engagement Present a New Challenge to Shareholders

Is ESG Investing Illegal? And Other Sustainable-Investing Questions in the Trump Era

The Case for Investing in Climate Adaptation

How to Make Your Voice Heard on Climate Issues