Despite Donald Trump’s return to the White House and the rise of right-wing parties in Europe, asset managers remain optimistic about the outlook for sustainable investment this year. So far, sustainable investment funds have shown significant growth in recent years. According to 2023 data, these funds reached approximately €500 billion in assets under management, with Europe accounting for 84% of this total—around €420 billion.
How Do Investment Firms View 2025?
According to Pascal Dudle, Head of Thematic and Impact Investing at Vontobel, sustainability will remain important despite challenges posed by recent political shifts. It will be driven by companies maintaining their commitment for reasons ranging from economic opportunities to risk management.
“A key example of this was the unexpected yet encouraging support from ExxonMobil’s CEO during COP29 in November, urging incoming President Trump not to exit the Paris Agreement and to keep the U.S. Inflation Reduction Act (IRA) intact. 2025 will also see continued investor scrutiny of the myriad ESG approaches being offered, with stricter strategies, such as impact investing, likely among the winners,” says Dudle.
He also believes that energy transition is here to stay, as clean technologies are now economically viable, scalable, and come with limited technological risk. “The need for reliability and resilience should, in particular, drive investments in infrastructure, such as increasing investment in power grids to ensure their reinforcement and modernization,” he adds.
Trump’s Challenge to Sustainable Investment
While investors—and Europe—continue their shift towards sustainability, the Trump administration has taken a different path. His first term was marked by rollbacks in environmental protections, the U.S. withdrawal from the Paris Agreement, and skepticism toward climate science. These policies affected the global sustainable finance ecosystem, meaning his return could once again test the resilience of ESG investment.
In his second term, Trump has declared a “national energy emergency,” in line with his campaign promises. According to experts at Allianz Global Investors, the measure aims to strengthen the U.S. fossil fuel sector, the world’s largest oil producer, and cut energy prices by 50%.
“His actions will complicate the fight against climate change. Additionally, skepticism surrounds Trump’s ability to halve energy prices as he claims. During the 2020 pandemic, even when oil prices turned negative, U.S. energy costs only dropped by 19%. Other factors, such as his order to replenish the Strategic Petroleum Reserve, could even push prices up in the short term,” state Greg Meier, Senior Economist at Allianz Global Investors, and David Lee, U.S. Energy Sector Specialist at Allianz GI.
Their conclusion is clear: “While Trump’s actions reinforce his commitment to fossil fuels, their actual impact on lowering energy costs will likely be limited and far from his stated expectations.”
Key Takeaways for Investors
In this context, Sophie Chardon, Head of Sustainable Investment at Lombard Odier Private Bank, believes investors should focus on sectors less exposed to political shifts, such as infrastructure, digitalization, energy efficiency in buildings, water management, and precision agriculture.
“From an investment perspective, Trump’s second administration could increase sectoral and regional divergence as the U.S. loses momentum in sustainable investments. After the sharp declines in sustainable investment valuations in late 2024, earnings dynamics are now in control, making stock selection crucial,” Chardon explains.
She also highlights that while the U.S. may slow its climate efforts under Trump, global momentum—especially from China and the EU—should keep the transition to green energy moving forward.
“Investors will need to focus on sectors that are less exposed to policy risks and on those aligned with long-term demand for clean technologies, infrastructure, and climate resilience,” she insists.
Europe’s Advantage in ESG Investment
According to Deepshikha Singh, Head of Stewardship at Crédit Mutuel Asset Management, investment prospects remain uneven.
“Investors may witness significant rollbacks in federal climate action and reporting standards. Trump’s pick to lead the SEC, Paul Atkins, has been openly opposed to the SEC’s climate disclosure rules. However, states like California and New York will likely continue setting ambitious climate goals,” Singh states.
Despite this, Singh sees Europe maintaining its leadership in sustainable investment, which could be a key advantage for investors.
“European companies that align with strict ESG regulations could attract more capital, while U.S. companies struggling to meet international standards could face higher costs and reduced access to foreign markets. The alignment of the European financial sector with the Paris Agreement and COP29 goals presents opportunities for those prioritizing green investments.
Additionally, Europe may seek to influence global financial markets by expanding ESG disclosure requirements for internationally operating companies, which could impact U.S.-based multinationals and other global corporations,” Singh explains.
The Future of ESG Investment Amid Political Cycles
For Singh, sustainable investment’s resilience lies in its ability to adapt to political cycles. While she acknowledges that Trump’s policies may pose challenges for some aspects of ESG investing, she sees it as unlikely that the overwhelming global shift toward sustainability will be reversed.
“Investors, driven by both risk management and opportunities, will continue to integrate ESG factors into their portfolios, even in the face of opposition. The demand for transparent and responsible investments will persist, regardless of who is in the White House.
In fact, Trump’s second term could even emphasize the urgency of private-sector leadership in driving the sustainable investment movement in the U.S. and beyond,” Singh concludes.
