Five sustainable finance trends for 2026

The RI team has chosen five themes we think will be high up the agenda in ESG and sustainable finance in 2026.

Market participants are leaving a whirlwind of a year behind, and while we’re not sure 2026 will be calm and stable, perhaps it will be somewhat less turbulent as the reshaping of sustainable finance continues.

There are two big overarching ‘As’ that we think will run through most key sustainable investing topics – including the ones listed below – in the year: AI and adaptation.

Alongside these trends, we’ve published specific outlooks on the following topics: US sustainable investing, EU regulatory developments and proxy voting.

As always, we’re keen to hear what you think we should focus our coverage on. Email us here with your thoughts as we get ready for another busy year in responsible investment.

Asset owners in the spotlight

Asset owners have always set the scene for sustainable investment trends and topics (follow the money!), but in 2026 they will truly take centre stage. They will likely lead the way in the ongoing reset of net-zero commitments and broader climate strategies, as well as the direction of stewardship.

Some drama could unfold, particularly on the mandate front, as asset managers are increasingly being told that their business is on the line if sustainability expectations aren’t met.

So far, however, there has been more talk than action overall. Next year, there will likely be more action – but far from all sustainability-minded asset owners will find dropping a mandate an easy (or indeed the right) decision. We’re hearing some speculation in the market that some of those that have ditched mandates have been motivated to a greater extent by cost or broader strategy changes.

On the flip side, perhaps we will also see more words of praise for managers that asset owners are happy with.

Zurich’s responsible investment head told us this summer she was often “blown away” by asset managers, including those that have stepped back from collaborative initiatives but have strong internal capabilities, and the NYC Comptroller’s office commended the 46 managers that provided transition plans that met its expectations.

We will also eagerly watch the next steps for asset owners on physical risks and climate adaptation – this is an area where we expect talk to move to action for many players in 2026.

Real-world decarbonisation (again)

You would be hard pressed to have read an investor climate report or listen to a panel debate on climate this year that did not mention the need to increasingly focus on reducing emissions in the real world.

Next year will likely see this continue, and a rising number of institutions reconsidering or tweaking their portfolio emissions efforts. Key examples of this include investors which have met or are on track to meet their interim portfolio net-zero targets (look out for our feature on this in the New Year).

Notably, an asset owner with one of the earliest shifts of a large chunk of its portfolio to Paris-aligned benchmark was AP2, which made the move in 2020. In October this year, the Swedish fund told Responsible Investor it is in the early stages of reconsidering this and allowing some emitters back into its portfolio for engagement.

We don’t think they are alone in this. Next year will shed light on what these investor reflections and re-evaluations will mean in practice for investment strategies, mandates and plans for the next round of net-zero interim targets.

Disclosure rethink

The regulatory journey that we once thought was heading towards mandatory sustainability disclosures in most major economies has, to a great extent, U-turned.

In the EU, it became clear this year that fewer companies will report significantly less information. Elsewhere, a US federal appeals court has granted a temporary injunction on California’s mandatory climate-related disclosures, and Canada paused its plans for climate reporting obligations.

There was some progress, too, with International Sustainability Standard Board (ISSB) standards coming into force in a number of jurisdictions this year. Brazil and Mexico will join the club in 2026, and the UK is expected to finally endorse its own ISSB-inspired standards early next year. New York State also this month issued its final GHG disclosure regulation.

But increasingly, investors appear to have accepted that comparable global disclosures are not around the corner. Some say they weren’t expecting to get what they really needed through mandatory disclosures anyway and are reaching out to companies themselves – and, of course, continuing to buy third-party data and use AI for their quests for information.

Another reason this topic will be on investors’ minds in 2026 is that a number of key reporting frameworks are being revised. There will be more clarity on the Science Based Targets Initiative (SBTi) and its ongoing revision of its flagship corporate standard, for example. A number of investors told us recently that they are having to take a more relaxed or agnostic approach to whether firms are using the standard.

The SASB standard is also being tweaked by the ISSB, under which it is now housed. As the EU has dropped plans for sector standards, SASB remains the key player here, and given the range of investor responses to the ongoing consultation on the latter’s future, we expect the new form of the framework will be followed closely.

Targeted and focused stewardship

This year has in many ways been challenging for stewardship as a function, but it has not been all doom and gloom. A key theme that we think will continue to develop in 2026 is investors rethinking their engagement activities and shifting it to fewer sectors, themes or firms.

This is part of what many refer to as a reset in which managers are beginning to think harder about how to demonstrate their own impact and where engagement can add value, and asset owners are considering what they want from their managers and can do with their own resources.

Related to this, next year will likely see more engagements on transition for industrial and hard-to-abate sectors – with steel and cement being particularly flagged to us – as well as the emergence of more corporate engagement on climate adaptation.

And while collaborative engagement initiatives have not had an easy time, they are still a crucial part of the toolbox for many investors, with the IIGCC’s steel engagement group and new Deforestation Investor Group among the ones we’ll be watching in 2026.

Funds fun

After years of anticipation, 2026 should finally be the year where the new form of the Sustainable Finance Disclosure Regulation (SFDR) becomes clear. The review of the legislation started with a first consultation in September 2023, but this year saw tangible progress.

The European Commission has proposed concrete product categories and the ditching of both entity-level PAI reporting and the definition of “sustainable investment”. Investors will likely follow the political discussions closely, and begin thinking about where their current Article 8 and 9 funds could belong in the new framework – and whether another great reclassification is on the cards.

The wave of fund renamings seen in 2025 could also cause headaches for some. The European Securities and Markets Authority (ESMA) has recently warned that the emergence of alternative terminology in names that could still be interpreted to indicate sustainability features – such as screened and scored – “could be problematic” for national supervisors.

In our outlook for 2025, we listed fund greenwashing enforcement as a trend, and it should be noted that this is still brewing – a flurry of managers faced warnings or enforcement actions this year. This is likely to continue, as many regulators have stepped up their sustainability and greenwashing expertise in recent years.