A formative year ahead. After a very turbulent 2025, we expect 2026 to provide a clearer foundation for how the next few years are likely to play out for sustainable investment.

President Trump has proven every bit as disruptive to the sustainable development agenda as he had intimated while campaigning. But while the One Big Beautiful Bill reduced support for green technologies, it also provided predictability. The same is true for much of the healthcare sector where clarity around US policy on pharmaceuticals has provided a firmer foundation for the sector as a whole. Meanwhile rate cutting by the Federal Reserve and other Central Banks is encouraging investors to deploy more capital.  We’ve identified what we see as some of the significant moving parts in the year head.

The energy transition and technology adoption

Throughout 2025 one of the strongest influences on demand for clean energy has come from the roll-out of data centres to support projected demand for artificial intelligence (AI). Utility scale solar, as typically the fastest and cheapest source of new power, has been a particular beneficiary. With data centre energy demand expected to increase by at least 130% by 2030, renewables will continue to benefit as will other sources of new power including nuclear, geothermal gas, and even in some cases coal.

Data centre demand for energy will also increase interest in energy efficiency, in our view. Sometimes known as the ‘first fuel’, in many cases the cheapest and quickest source of power can be sourced through more efficient use of existing power capacity. We expect virtual power plants, co-location strategies as well as more traditional demand-side management to be more prominent in meeting demand growth in 2026.

EVs continue to take market share, but more slowly than in 2025

Beyond data centres and renewables, we expect electric vehicle penetration to continue and increasingly move into the mass market. A wider range of cheaper models and continued policy support in many countries (including in China) will drive global EV growth of around 13%¹. This rate of growth is expected to be slower than the >25% growth in 2025 as the US market declines following the withdrawal of policy support. Overall, we expect battery electric vehicles (BEV) and plug-in hybrid electric (PHEV) vehicles to account for 27% of global car sales in 2026, up from 25% in 2025². 2026 will also be a pivotal year for robotaxis (which are almost exclusively electric due to operational benefits) with US and Chinese developers pushing aggressively into new markets across Europe and the Middle East. 

Swings, roundabouts and heat pumps

The US is likely to see heat pumps continue to take market share from unitary AC units in the market for air conditioning equipment. Heat pumps already significantly outsell traditional boilers (or ‘furnaces’) in the market for heating equipment³. However, the rate of growth here may well moderate as government incentives are withdrawn. At the same time, the heat pump market in Europe is expected to stage a recovery with more stable policy support following precipitous peaks and troughs in recent years. 

An historic year for energy-related emissions?

2026 may well also mark an historic moment with energy-related global greenhouse gas emissions likely to peak. The dramatic increase in renewable energy has meant that in recent years almost all new energy demand has been met by renewables. In 2026, it is possible – even probable – that improvements in energy efficiency, continued rapid deployment of renewables and tepid economic growth will mean that all new demand is met by renewables. This combined with  scheduled fossil fuel retirements should mean that energy related GHG emissions peak and a vital milestone in the fight against climate change has been met.

Global tech, geopolitics and market dynamics

Sustainable investment, like all investment markets, is broadly framed by the market dynamics that result from the maneuverings of governments and that of dominant industry sectors such as global tech. 2026 is likely to see significant developments in both of these areas. For example, after several years of dramatic growth, 2026 will likely see cracks widening in the bull case for AI. Concerns about valuations and aggressive revenue growth projections are well understood, but there are other more fundamental signs that there is a limit to the ambition of the global tech giants. The Australian ban on social media for children, for example, may well be replicated in other jurisdictions. Social media use in many regions is already declining and the ubiquity of ‘AI slop’ after just a few years of use, is raising questions over whether social media has already had its day⁴. 

Government maneuverings have already taken centre stage in 2026 with President Trump’s intervention in Venezuela. While the precise motivation remains the subject of conjecture, it is clear that under Trump’s leadership the US is willing to take dramatic steps to secure its interests. The same is clearly true for Russia, and likely for China as well. We are clearly back in an era of powerful geopolitics, but so long as these large nations are not drawn into more direct conflict, the impact on markets is likely to remain focused on key markets like oil and gas with relatively modest impacts overall. 

China is also due to take centre stage during the year when it publishes its next five year plan including its decarbonisation ambitions. China already has a stunning lead in the cleantech race. Cleantech offers many benefits to developing countries and we can expect China to continue to leverage this cleantech dominance in support of its own strategic interests.

Conclusion

2026 is shaping up as a pivotal year for sustainable investing. Clean energy solutions are maturing, offering cost-effective paths to decarbonization. As a speaker at our annual conference put it, ‘the economics of cleantech has overtaken the politics’. AI is now entering a new more nuanced phase where there will be losers as well as winners and we expect to see a continued broadening of market performance beyond tech. At the same time policy uncertainty across many of the markets we invest in including cleantech and healthcare is now being replaced with predictability. All the while geopolitical shifts and economic uncertainties will continue to create both risks and opportunities for investors. We are confident that these developments together provide a supportive backdrop for sustainable and impact investors in 2026.