In the coming year, sustainable finance is expected to face significant regional disparities as Donald Trump's return to the U.S. presidency influences policy directions. While global warming continues to escalate, government responses remain sluggish in meeting climate goals established nearly a decade ago. Regulators worldwide are tightening rules to reduce carbon emissions, but progress varies, with Europe leading and the U.S. lagging. The anticipated resilience of global sustainable investment will be tested by differing approaches between the two regions, particularly as U.S. investors adopt a more conservative stance to mitigate risks. Legal challenges and market dynamics further complicate the landscape, highlighting the need for robust strategies to ensure sustainable financial growth.

The political shift in the United States under Trump's leadership is poised to widen the gap between U.S. and European sustainability efforts. As environmental, social, and governance (ESG) policies face backlash, U.S. companies may scale back their climate initiatives to avoid scrutiny. This trend is already evident, with major U.S. banks exiting coalitions aimed at reducing emissions. Meanwhile, European funds have seen substantial inflows, totaling $37.3 billion, while U.S. funds experienced withdrawals amounting to $15.9 billion. The divergence extends to new ESG-focused fund launches, where only seven were initiated in the U.S., compared to 189 in Europe. Regulatory pressures and market consolidation have also led to more closures than launches of sustainable funds globally.

Legal pressures on climate efforts are intensifying, with a significant portion of climate litigation cases not aligning with emission reduction policies, particularly in the U.S. Despite these challenges, underlying market drivers for sustainable finance persist. For instance, the demand for green energy remains strong, and sectors like healthcare and industrials are exploring climate tech solutions to cut costs. The era of technology-driven transformation shows no signs of slowing down. Moreover, the amount of capital raised through sustainable bonds increased in both the Americas and Europe in 2024, indicating ongoing investor interest in this space.

Looking ahead, investors are expected to focus more on the tangible impacts of their investments on the real economy. Ensuring that such investments yield economic returns for both companies and investors will be crucial for the success of the transition to a sustainable future. While the outlook remains uncertain due to potential policy changes under Trump, many market drivers for sustainable finance continue to thrive, signaling a resilient path forward despite regional differences.