Three themes that will influence ESG investing in 2025

The Conference of Parties (COP) process is a byproduct of the Paris Agreement created in 2015. COP-30 marks the 10-year anniversary of this agreement and will require involved countries and governments to submit their second nationally determined contributions (NDCs) — the actions they’re taking to limit greenhouse gas emissions. This will come at a time when most of them will be behind in their commitments to meet net zero greenhouse gas emissions by 2050. Uncertainty remains around how committed countries are to achieving their targets, and whether they will accelerate or decelerate their actions domestically. This could result in significant investment implications.

While we’re still not clear on which policies will be implemented, we will likely see regulatory rollbacks, reduced focus on climate change, and energy policy shifts once the new U.S. administration takes office. If this happens, it may result in less stringent reporting requirements and impact the overall transparency and accountability of corporate issuers. This could open to the door to such things as increased greenwashing — when a company isn’t as environmentally friendly as it claims— and it may become harder for fund managers to effectively monitor and assess environmental risks and opportunities within their portfolio.

However, there may be some positives on the horizon as well. For example, during the presidential campaign, nuclear energy was an important part of the discussion. As a result, we could see moves to reduce the regulatory challenges that come with developing new nuclear energy plants, and a push to increase its importance in the electrification of the U.S. economy.

We’re seeing significant advancements in both technology and infrastructure to sequester carbon dioxide. This is extremely exciting because it should help us better achieve net zero greenhouse gas commitments by making it easier to remove residual emissions from such hard-to-abate sectors as industry, agriculture and transport. This is a fast-growing market and will represent increasingly significant opportunities for investors.