Outlook 2025
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Outlook 2025
2025 promises to be an eventful year in the world of responsible investing.
On the one hand, geopolitical storms are battering the industry from 2 sides: From the US, it’s tariff chaos, uncertainty about the United States’ commitment to NATO, and an aggressive campaign against perceived “wokeness”. From Europe, in re- sponse, it’s an urgent need to re-arm the continent in the face of Russian aggression and a drive to improve competitiveness, which must avoid throwing the sustainability baby out with the red-tape bathwater. On the positive side, Institutional investors across the globe (notably including parts of the US) remain committed to responsible investing, and especially the various ways climate concerns can be integrated into portfolios. And in the European retail market, the new ESMA naming regulation and the upcoming revision of SFDR promise to make the sus- tainability conversation between financial advisers and retail investors much easier. In any case, the reality of climate change, biodiversity loss and social and governance challenges is becoming increasingly un- deniable, as are the risks that this poses to investors. This alone should ensure that responsible investing remains the major secular trend in asset management. The tariff chaos unleashed by the new US administration is a real and present danger to world prosperity, both in the short and the long term. While the exact longer-term international trade regime that will result from this is still unknowable, at a minimum the ensuing uncertainty can be expected to dampen the inclination of investors and businesses to take risk, to hire
and to expand economic activity. In such an environment, it is natural that policymakers and companies focus first on eco - nomic firefighting, seeking to ensure – plainly put - to ensure that their constituents and workers do not find themselves out of a job from one day to the next. While this is a natural reaction to economic uncertainty, the hostility against ESG, diversity initiatives, climate investing and other activities suspected of “wokeness”, which have been a feature of parts of the political scene in the Unites States for some time are of another order altogether. In response to this, a number of US financial institutions have left the major cli - mate initiatives. This requires asset owners to be even more diligent in their choice of partners and service providers, to en- sure that their preferences regarding Stewardship and respon- sible investing in general are properly reflected. Changing attitudes to defence are another game-changer in the world of Responsible Investing. Historically, defence-relat- ed investments have been excluded – or at least underweight- ed - in most ESG-focused investment strategies. This has been the case especially for so-called “controversial” weapons, which have been deemed non-investible across all of Nordea’s funds. Importantly, in our Nordic home region, Nuclear arms have been considered to fall under the heading of controversial weapons. This has meant that most large arms manufacturers were de facto excluded from our investment universe. However, with the continuing full-scale invasion of Ukraine by Russia, and
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