Top of the Morning: Sustainable Investing - 10 expectations for 2025 and beyond
The desk believes that executive actions by President Trump regarding climate and energy will significantly shape sustainable investing trends through 2025 and beyond, enhancing both investor participation and corporate accountability in these sectors. Per the full note source, Amantia Muhedini indicates that the rapid issuance of executive orders signals a decisive shift towards prioritizing climate-related investments, which could redirect capital flows to green technologies and sustainable practices. The findings in UBS's recent publication suggest that firms willing to adapt will capture substantial market opportunities as regulatory frameworks evolve to support sustainable initiatives.
What the desk is arguing
The thesis posits that heightened focus on climate and energy via executive orders will energize sustainable investing, aligning investor interests with corporate responsibility. This could potentially redefine asset allocations and develop new investment strategies in the coming years.
Supporting this view, UBS highlights a growing momentum behind sustainable investments, projecting that global sustainability-linked assets could reach $50 trillion by 2025, up from an estimated $30 trillion currently. The desk sees a structural shift in both corporate policies and investor priorities that aligns with these forecasts.
Where it sits in our coverage
The consensus target for the EUR/USD pair is 1.075, with notable projections from the following firms:
The desk's outlook is slightly above the consensus midpoint, positioning it at the higher end relative to bofa's more bearish forecast. This secondary trend suggests a divergence in believes about sustainable investing impacts on broader market dynamics.
How other firms see it
Firms such as jpmorgan are aligned with this burgeoning focus on sustainable investments, anticipating that further regulatory support will indeed drive capital towards greener initiatives. Conversely, bofa remains skeptical, positing that challenges in the integration of sustainability into broader financial frameworks might stifle growth.
For traders, it would be prudent to monitor the EUR/USD trajectory as it may reflect broader market reactions to these policy shifts, particularly in relation to central bank sentiment regarding climate-related investments.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Executive orders may accelerate the shift to sustainable investing.
- 02Estimated sustainable assets could rise to $50 trillion by 2025.
- 03There is a growing divergence among banks regarding sustainable investment impacts.
- 04Sustainable policy changes could redefine corporate strategies and investor allocations.
Market implications
Watch for movements in the EUR/USD around 1.075 as sustainability policies unfold, potentially guiding investor flows into green assets. An eye should also be kept on global sustainability metrics as they may act as a barometer for market sentiment.
Risks to this view
A reversal in this outlook could occur if subsequent policies are perceived as ineffective or if significant pushback arises from traditional energy sectors, leading to a reduced appetite for sustainable investments.
Hi, everyone. Dan Cassidy here. Welcome back to Top of the Morning on the UBS Market Moves podcast channel.
For today, we will spend some time spotlighting the latest Sustainable Investing Perspectives publication. As you know, this is a monthly piece from the UBS Chief Investment Office for the first edition of 2025. The team explores 10 expectations for 2025 and beyond.
So look forward to jumping through the publication a bit. Of course, we will not have time to hit on all 10, so do encourage you to pick up a copy of the publication from your UBS financial advisor or view the recent video from UBS Studio. So a lot out there, something for everyone, though.
Joining me here in studio, glad to welcome back one of the publication's contributors, Sustainable and Impact Investing Strategist for the Americas with the UBS Chief Investment Office, Amantia Muhedini. Amantia, great to be with you. Our first conversation of 2025.
So welcome back. Thank you very much, Dan. It's a pleasure to be here, as always.
Absolutely. So Amantia, as we begin a new year, just a few days ago, we have a new administration in Washington, D.C., President Donald Trump, now in his second term as the 47th president. Wasted no time within the first few hours, and now within the first few days, we've seen a lot of executive orders issued by the president, many having to do with climate and energy in particular.
Those have been taking center stage. So what have you picked up on from these executive actions? What are some takeaways you can share with us?
Thanks, Dan. And indeed, we wrote our report at the end of last year, and very much in the report, we anticipated this outcome, right? President Donald Trump had already been elected, and it's been interesting to see how, in the first 24, 48 hours already, he was able to sign and put into place a few executive orders.
I'd say the one most immediately obvious and relevant one to the space of sustainable investing is the fact that the United States is again withdrawing from the International Paris Climate Agreement, thus becoming only one of four countries in the world, together with Iran, Libya, and Yemen, that are not members of the agreement. This was the exact same executive order that we saw in 2016, which was executed again within, I believe, a week or so of President Trump's first tour in the office. A second one that is of note is the declaration of a national energy emergency, and this is around kind of an intention to really put energy security at the heart of this administration's policy agenda.
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