While climatic issues have never been so urgent, the world’s political and geostrategic dynamics are shaking up the foundations of responsible finance. Donald Trump’s return to the Presidency of the United States, the massive rearmament of Western countries, the war in Ukraine and increasing budgetary deficits constitute all factors that undermine the impetus of sustainable investments. However, despite these opposite winds, signals of resilience and emerging adaptation, drawing the contours of a lasting finance in mutation.
An unfavorable political context
Donald Trump’s return to the White House marked a turning point in American climate policy. From the first months of its mandate, the administration began a massive relaxation of environmental regulations, questioned the diversity and inclusion initiatives and revoked the participation of the United States in the financing of the energy transition. This posture leads to direct repercussions on capital flows: American asset managers have reduced the promotion of ESG strategies, creating a shock wave in this area on European and global markets.
In parallel, Europe, a traditional bastion of sustainable finance, faces its own contradictions. European regulators are continuing to strengthen ESG standards with the entry into force of the CSRD (Corporate Sustainability Directive Directive) directive, from January 2026, for listed companies, which marks a decisive step in the standardization of ESG reporting. However, budgetary priorities are changing under pressure from military spending and public deficits. The reset of the member states, motivated by the war in Ukraine and geopolitical tensions, thus diverts part of the resources initially allocated to the energy transition.
War in Ukraine: paradoxical catalyst?
The Russian-Ukrainian conflict has profoundly modified the ESG investment paradigms. In the short term, flows to sustainable funds have decreased, investors favoring more liquid assets and less exposed to geopolitical uncertainties. The revival of coal, the return of shale gas to the United States, focusing on armaments and suspension of certain green subsidies illustrate this temporary withdrawal.
However, in the medium and long term, war can paradoxically act as a catalyst for the energy transition. Energy independence has become a strategic priority, pushing European states to accelerate their development plans for renewable energies and energy efficiency. On the social level, security issues redefine the priorities of ESG funds, with a progressive reintegration of the defense sector in certain portfolios, in the name of fundamental security to security. Is this an approach that we can consider to be sustainable? It is allowed to doubt it.
Market and investor reactions
The financial markets reacted contrasting to these developments in 2025. The first quarter was marked by record net outflows of American sustainable funds, reaching 8.6 billion USD, a first since 2018. This trend is explained by the underperformance of certain ESG sectors, in particular clean energies, and by uncertainties concerning the withdrawal of American financing. However, assets under the management of the world’s ESG funds have remained stable, testifying to a basis of loyal investors and a long -term conviction.
Financial institutions, on the other hand, face major operational challenges. The integration of ESG criteria in risk models, data quality and new European regulations require considerable technological and human investments. The real issue is no longer compliance, but the strategic transformation of business models.
Perspectives: between adaptation and opportunities
Despite the turbulence, the prospects for sustainable investments are not only dark. Several substantive trends support their development:
– Regulatory strengthening: The European Union continues to harmonize its ESG framework, with clearer requirements and measurable performance indicators.
– Green technologies: Innovation in the fields of clean energy, water management, agriculture and the digitization of infrastructure opens up new investment opportunities.
– Societal request: The expectations of citizens and consumers in sustainability remain strong, pushing businesses to integrate ESG issues into their strategy.
– Financial resilience: In the long term, sustainable funds have historically outperformed their traditional equivalents, strengthening their attractiveness for institutional investors.
The ESG criteria are evolving to integrate new dimensions. Biodiversity and natural capital accounts become essential axes of analysis. Artificial intelligence also plays an increasing role in the management of ESG data and decision -making.
On the social level, the diversity, equity and well-being of employees are now considered key indicators. The circularity of economic models and transition strategies – aimed at fairly supporting populations in the ecological transition – are increasingly valued by investors. The difficulty to date is to find investment vehicles combining the above principles and a return to ensure long-term pensions. The financial industry must continue to innovate in this sense in order to offer solutions impacting and credible to investors.
And in Switzerland?
In Switzerland, almost a quarter of greenhouse gas emissions are produced by the built building stock (OFEV source, April 2025). These emissions come from existing heaters and obviously defects in insulation of buildings. The Confederation 2050 decarbonation objectives are clear and the desire to improve the park of most institutional owners, in particular pension funds, is displayed. However, administrative constraints often inexpensive slow down the implementation of this effort to decarbonize buildings.
Significantly reducing greenhouse gas emissions in the time given by the Confederation is ambitious, but achievable if the efforts are coordinated between the authorities, the companies and the citizens. The ecological transition is also an economic and social opportunity, which can turn into an investment opportunity for the second pillar and contribute to resilient and sustainable Switzerland.
For investors, it is now a question of navigating with discernment in a complex landscape, by reconciling financial performance, societal impact and environmental resilience
Conclusion
The year 2025 illustrates tensions between sustainability imperatives and geopolitical realities. ESG investments are put to the test, but do not disappear. On the contrary, they evolve, adapt and redefine. For investors, it is now a question of navigating with discernment in a complex landscape, by reconciling financial performance, societal impact and environmental resilience. Sustainable finance and the actions necessary for a viable energy transition are no longer simply a vision: these are essential components for a long -term investment strategy and the maintenance of a quality of life in everyone. I will finish with this quote from Victor Hugo from his book History of a crime And we can no longer present: “We resist the invasion of the armies, we cannot resist the invasion of ideas.”
