Geopolitical shifts: What investors and businesses must consider

Possible scenarios reshaping sustainability

• Fundamental shifts in valuation: The core assumptions behind the valuation of sustainable assets and companies may change or become misaligned (e.g., trade tariffs impacting access to or cost of raw materials like LNG and minerals).
• Regulatory uncertainty: Business models reliant on sustainability regulations may face new risks (e.g., EU deregulation of reporting and compliance or changes in U.S. tax credits for clean energy).
• Consumer priorities shifting: Amid economic uncertainty, consumers may prioritize affordability over sustainability (e.g., choosing to keep an older combustion-engine car rather than switching to an EV).
• Global sustainability challenges remain: Despite policy shifts, fundamental issues like climate change, biodiversity loss, and pollution persist—and will eventually demand action (e.g., China could see the U.S. policy shift as an opportunity to accelerate its leadership in green technology).
• Resilience of market-driven sustainability: Sustainable assets rooted in customer demand and market-driven value creation are likely to remain strong (e.g., cost-competitive renewables, circular economy innovations).

Three key questions for investors and businesses

Instead of reacting with uncertainty, we must take a strategic approach. While sustainable assets hold long-term value, short-term volatility is inevitable. Investors and businesses should reassess their exposure by considering three key questions:

• To what extent are my business or investment priorities influenced by core beliefs that are now being challenged?
• What are the key sustainability-related drivers of value for my assets or business, and how are they exposed to significant risks or changes within our investment horizon?
• To what extent is my business or investment strategy dependent on sustainability regulations or subsidies?

Staying ahead in an uncertain landscape

While geopolitical shifts create new challenges, the long-term case for sustainability remains strong. Businesses and investors who take a proactive approach—evaluating risks, adapting to market-driven sustainability trends, and building resilience—will be better positioned to navigate uncertainty and seize new opportunities.

Want to dive deeper into the latest regulatory shifts? Explore our breakdown of the Omnibus package and the key proposed changes to the EU Taxonomy.