Top trends 2025: Sustainability in financial services

Sustainability product opportunities
ESG investment products and sustainable product opportunities have undergone immense growth in recent years, with attention now turning towards sustainable finance products. As firms push to align their investment offerings with their organizational values, banks and insurers will offer more products that promote climate resilience, risk management, and financial inclusion.
Sustainability service opportunities
By 2025, 70% of consumers in emerging markets, along with over 70% of millennials and Gen Z, will prioritize sustainability in their purchases, driven by increased environmental awareness. ESG investments and advisory opportunities are growing, with 62% of financial advisors integrating ESG offerings. The market for sustainable products is expanding, reshaping global supply chains and driving innovation in product development and business models, leading to higher customer loyalty and market share for sustainable brands.

ESG risk criteria
ESG disputes have cost S&P 500 corporations over $600 billion in market capitalization in seven years. Global regulations and D&O liability are increasing, while ESG integration reduces financial volatility. By 2025, 71% of investors will incorporate ESG into portfolios and investors are affirming ESG factors contribute more to resilient portfolios with high returns.
Increased regulation
Regulators are pushing for greater consistency and accuracy in ESG reporting, which will impact financial services firms’ investment strategies. Stricter ESG regulations enhance accountability, with 99% of companies preparing for disclosure mandates. ESG data stores and reporting technology improve risk mitigation, compliance, and investor confidence, potentially increasing expenses but boosting long-term shareholder value.
Industrialized climate risk modeling
New ISSB, CSRD, and SEC rules are expanding sustainability reporting. By 2050, climate change could impact up to 28% of S&P 1200 real assets annually and cause $38 trillion in global income losses. Firms with strong climate risk management and ESG practices will gain a competitive edge and attract investment, while AI-driven climate risk models become mainstream by 2025.
Greenwashing and greenhushing
Fearing public and legal backlash, some large companies refrain from publicizing their climate targets, leading to “green hushing,” the act of underreporting or concealing ESG activities to avoid scrutiny. Compounded with accusations of “greenwashing” and rising economic instability, many companies will disengage from global ESG standards and reduce investments in ESG funds.
Decarbonization of portfolios
Decarbonization strategies are becoming increasingly popular among institutional investors. To reduce carbon footprints and align with climate goals and regulation, a key sustainable investing trend will be the continued prioritization of low-carbon investment in 2025.

Sustainability as corporate DNA
Financial institutions are expected to embed sustainability into every aspect of their core business strategies, including supply chain, products and services, and operations. Firms will scale their climate adaptation efforts with hopes of improving operational efficiency, reducing waste, and decreasing disruption.
Gen AI aiding sustainability
Investments in AI for sustainability are increasing, with significant growth in AI-powered analytics for data-driven ESG decision-making, reporting, and risk management. Gen AI excels in data extraction, summarization, and processing, giving organizations an edge in ESG reporting by generating insightful content for human consumption.
Going beyond carbon emissions
For years, carbon emissions have been a primary point of focus for financial institutions. However, firms will increase their focus on social and biodiversity elements of ESG strategies in 2025, aiming to enhance corporate reputation, attract more investors and customers, and set new industry standards.