As tariffs continue to rock global markets, Sustainable investors in the U.S. are navigating volatility and political headwinds while pursuing – and finding – opportunities to deliver impact and returns.
Long-term investors see sustainable investing as a way to address long-term, systemic financial risks that go beyond political seasons. US SIF’s annual sustainable investing trends report found that despite political headwinds, 73% of sustainable investors expect the sustainable investment market to grow significantly in the next 1-2 years. Physical and transition risks and their related social impacts remain a dominant area of focus.
While this sustainability-forward mindset may seem at odds with new policy developments, the opportunity to continue the momentum remains strong.
Disruptive change
In the U.S., sustainable investing has entered a period of disruptive change. The U.S. Securities and Exchange Commission (SEC)’s recent decision to end defense of its climate disclosure rule removes one tool that would have allowed investors to better gauge material climate-related risks in their portfolios. Recent appointments and legal bulletins also signal the SEC’S intent to make it easier for companies to ignore shareholder proposals that focus on climate and diversity.
US SIF views shareholder proposals as essential engagement tools. As we wrote in a recent report in partnership with the Interfaith Center on Corporate Responsibility and the Shareholder Rights Group, “environmental and social shareholder proposals address financially relevant risks at companies and protect the American public by promoting accountability for corporate misconduct and egregious behavior.”
There is a lot of noise here, but what we are seeing on the ground is that long-term investors are continuing to engage companies on systemic material issues, and companies are continuing to commit to policies that support their bottom lines.
Rising above the rhetoric
U.S.-based Costco offers an example of what happens when a corporation chooses to rise above the rhetoric. The retailer stood by its decision to prioritize its diversity initiatives pointing to the business benefits they create and saw a 7.7 million increase in shoppers. Shareholders of Apple rejected a proposal that would have ended the company’s diversity program, while scores of other companies have publicly said they remain committed to these initiatives.
Meanwhile, on the climate front, big banks and insurance companies are assessing the realities of physical risk from climate catastrophe in a warming world. And the threat of transition risk continues to warrant a response, especially from companies operating in specific U.S. states and the EU, where regulations require a higher degree of transparency.
It’s also becoming more and more evident that investments in clean energy have tangible benefits for investors, policymakers, and society, which continues to drive the flow of capital towards these opportunities. A 2024 analysis of the impacts of the Inflation Reduction Act (IRA), the U.S.’s signature climate law, shows that for every dollar the government invested in the clean energy transition, the private sector invested $5.47.
Hundreds of billions in investments have created new jobs and a revitalized manufacturing sector. These benefits have garnered bipartisan support: 21 Republicans recently signed on to a letter to defend the IRA’s clean energy credits.
On the state level
The push-pull over sustainability is not only playing out at the federal level. Since 2021, hundreds of legislative attacks employing a variety of tactics, from dismantling ESG scoring systems to restricting pension investments from considering ESG investing data, have been launched at the state level. But a closer look shows a decrease in these anti-ESG bills: in 2023, 23 anti-ESG laws passed in states across the U.S.; in 2024, that number fell to only six.
Still other states are forging ahead as leaders in addressing climate risks. California is filling a regulatory void – it requires companies doing business in the state with annual revenues of over $500 million to report on financial risks caused by climate change as well as their mitigation plans, and companies with annual revenues over $1 billion to disclose emissions. Similar laws are under consideration in Colorado, Illinois, New Jersey, and New York.
And nearly half of U.S. states have adopted clean energy goals, most of which are codified into law. While these goals have recently been challenged by the federal administration, bipartisan state-level coalitions and market forces continue to point towards the transition to renewables.
A path forward for investors
Intensifying U.S. policy uncertainty and its global ripple effects may force sustainable investors to pivot in unexpected ways, but the horizon for sustainable investors is far longer than a four-year administration. One data point from S&P paints a particularly clear picture: by 2050, the energy transition offers $60T in investment opportunity, and climate hazard exposure could result in $25T in financial impacts for the world’s largest companies. For those who take the long-term view, the path forward is clear.
US SIF members remain steadfastly committed to advancing sustainable investing. Our members are meeting this current wave of change and using it as an opportunity to emerge with even more precision in how to invest for impact and returns.
Maria Lettini
CEO, US SIF
Rising tensions: the new reality for sustainable investing in 2025
This article is related to the Finsif event held in April 2025, and after the event you can find materials from the event in the member section of our website.
