2025 was a turbulent year for responsible investing. We saw a meaningful shift in the mood around the environmental, social and governance (ESG) efforts of companies and investors alike, with some walking back commitments to everything from DEI to climate change. This was primarily because of the shifting power dynamics in the U.S., but not exclusively so. The rumblings were coming from many jurisdictions, including the European Union and Canada. It would also be a mistake to think that this shift started with the first 60 days of the new U.S. administration, as the change in mood had been growing steadily over the last couple of years.

What does this shift mean? The rumours around the demise of ESG are greatly exaggerated. Nothing has fundamentally changed that would render the rationale for addressing material ESG risks irrelevant. Systemic risks such as climate change or inequality, or company-specific risks like human capital and access to water, remain. If anything, their importance and materiality have grown, and many investors have responded to the pushback by deepening their fundamental integration of ESG factors. What might have died, we hope, are performative nods to sustainability or responsible investing that never had much substance in the first place. Out of their ashes will grow a more robust and meaningful commitment to sustainability that is based on ambition and realism, and that is genuinely tied to business models. It will be a full-circle return for investment managers to the underlying premise of responsible investment and long-term value creation for our clients.

Responsible investing themes to watch for in 2026

A focus on positive outcomes

The conversation will shift from focusing on what we do not want, or what we need to avoid, to what it is we are hoping to create; namely, a cleaner, more affordable and more equitable future. While the discussion of risks will always have a role to play, especially for investors, we are seeing the limitations of focusing on the downside. The way forward will inevitably have to entail a clear story around how things will get better if we pursue sustainability objectives.

Clean technology

The incredible pace of innovation in the clean tech space, from solar panels and wind turbines to battery storage and electric vehicles, will continue in 2026. The combination of rapid innovation, increasingly attractive economics and geopolitics (think energy security) means the transition is happening before our eyes on the global stage, and the growing gap between the U.S. and the rest of the world will be a challenge for investors to navigate. Combined with the increasing trend towards electrifying everything, the increased demand for electricity means a growing market for solutions.

AI issues come to the forefront

AI is transforming tech companies and becoming a key factor in making safe ESG holdings, an ESG darling (low carbon, socially conscious, making our lives easier, etc.), to being the nexus of most every core responsible investing concern. The rapid evolution of AI is magnifying the already huge concerns around privacy, digital rights, misinformation and security, while the growth of data centres to feed the AI boom is already running into energy and water limitations that make tech companies a growing climate and water security concern. Investors will be grappling with how to address this convergence of risk in some of their most held names.

Building out infrastructure responsibly

To achieve the future we want, we need to build a lot of things. There is a huge government and industry focus on the need to build out key infrastructure, from transmission lines that will help expand a low-carbon electricity grid, to mining and processing the raw materials for batteries and smartphones. How we build these things will matter. The goal of removing unnecessary barriers will be broadly embraced, but this will turn an even greater focus to the “how.” In Canada, this will be a true test of the nation’s commitment to reconciliation and supporting Indigenous rights as well as to the oft-quoted commitment to the tenets of sustainability.

Policy outlook for Canada

One of the biggest policy developments will be how the federal government rolls out its climate competitiveness agenda and creates the right policy environment to unlock climate-focused investor capital at scale. It has signalled a focus on the opportunity side of the transition, which should bode well for investors looking to support climate solutions and the supply of critical minerals such as copper, nickel, lithium and rare earths. Likewise, the focus on large nation-building infrastructure projects should create lots of opportunities for investors. However, governments at every level will need to show they have learned from the mistakes of the past and ensure these projects address key Indigenous and community concerns if they are to succeed.

Foundational regulations governing industrial carbon pricing and methane emissions will continue to be part of the regulatory framework but will face continued pressure. The federal government has set a clear agenda of reducing regulatory barriers and streamlining development – all good things that will create opportunities for investors. Those investors need to let governments know that streamlining is only part of the equation. If we are going to give investors confidence in a Canadian development boom, corporations and governments will need to ensure that Indigenous rights are central to their plans.

While the Canadian Securities Administrators (CSA) has paused development of mandatory climate-related disclosure rules, the investor appetite for better disclosure will not disappear. Whether the CSA will move on the issue when the U.S. is going in the opposite direction is uncertain, but the federal government has indicated an interest in pursuing better disclosure standards. It also appears that the federal government has listened to stakeholder concerns about the negative impact ofBill C-59 on the sustainability disclosure of companies in Canada, particularly energy names. Changes to the bill in 2026 will hopefully bring back the disclosures investors need.

Looking ahead with optimism

At a time of heightened complexity and multiple crises, it is essential to have investment firms using their influence and leverage to address these risks and opportunities in a thoughtful and meaningful way. It is also right to be skeptical and to ask the tough questions of investors to ensure they are doing the real work required of them to drive positive outcomes. We also need to have the requisite humility when we talk about what we can achieve. It should also be a time of optimism. Guarded optimism, to be sure, but optimism nonetheless. The seeds have been planted for real change, but it does not happen on its own. Investment managers have the power to influence positive outcomes if they act with intention and a commitment to creating long-term value for their clients.

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