The Sustainable Finance landscape has witnessed dramatic upheaval in the last few years driven by backlash to the perceived ills of the industry including greenwashing and overpromising, a politicised or ‘woke’ agenda, and increasingly burdensome reporting regimes. 2025 appears to have been somewhat of a turning point in this upheaval with many financial and investment firms around the world settling on a strategy of continuing their work on sustainable products and practices with less public promotion or fanfare and more focus on working towards intelligent reporting frameworks which are additive to the client experience. This is bringing the focus of Sustainable Finance firmly back to the core principle of doing the work for the sake of client returns and real, positive change in the environment and society. This focus on what’s ‘important’ rather than what’s ‘fashionable’ opens the door to even more positive evolution in the industry in 2026 and I, for one, am extremely excited to see where this leads our community.
One of the areas I think is going to see increased awareness and innovation in 2026 and beyond is the incorporation of social risks and opportunities into Sustainable Finance products, reporting, and decision-making in a more concrete, intentional way. Gone are the days of the ‘S’ in ESG being cast aside as ‘too hard’ or beyond the scope of current sustainability tools, stewardship or reporting frameworks, and performance indices.
Increasingly, professionals in our industry are seeing sustainable risks and opportunities as systems-level problems to be untangled using innovative solutions derived from a holistic, rather than siloed, view of environmental, governance, and social issues. This holistic take on sustainability issues allows social risks and opportunities to come to the fore as a key component of tackling vital challenges such as the Just Transition without getting lost in favour of environmental issues. This advancement in Sustainable Finance is absolutely vital as we cannot simply focus on the environmental aspects of issues such as climate change or protecting nature without a thorough evaluation of the social externalities – intended and unforeseen. We cannot continue to pursue climate and nature mitigation strategies without protecting communities and working to prevent further bifurcation between global ‘haves’ and ‘have nots’ as the Green Transition must also function credibly as a Just Transition – our shared prosperity depends on it.
Facilitating this increased focus on social aspects of Sustainable Finance is work happening across the globe to better understand, categorise, and capitalise on social risks and opportunities.
In Europe, we eagerly await the arrival of guidance from the Taskforce on Inequality and Socially-Related Financial Disclosures – the first attempt at creating guidelines for understanding and reporting on risks and opportunities as they relate to people and communities around the world. This will help bracket the discussion of social factors as they relate to sustainable finance products and practices and help quantify and qualify social impact and externalities.
“We think about this through a systemic lens… aggregations of inequality (like low pay in individual entities) we believe drive system level risk in three ways: societal stability risk, macroeconomic risk, and financial stability risk”.
~ Simon Rawson, Executive Director, TISFD
“As a bank, we should [be looking and social and inequality issues] because it’s the right thing to do, but we need to look at by the different roles we have… because each one of those roles have a different impact on social risks.”
~ Amanda Zilig, Global Human Rights Program Lead, ING
In ASEAN, a vital recognition of the diversity of stakeholder groups within specific countries as well as the broader region is leading the way in developing products and solutions – such as project finance or small and micro-lending – intended not to deliver broad stroke improvement but progress according to tightly defined impact Key Performance Indicators specific to individual groups. This innovation improves the ability of financial institutions to monitor and report on the actual progress being made through the use of sustainable finance products. I am truly excited to see how this work develops in the region and beyond and I think there is a great deal of learning the rest of the world can gain from ASEAN in this regard.
Whilst the past few years have been difficult for the Sustainable Finance industry, I think that difficulty has and will continue to lead to a tighter focus on creating and running more credible and better designed products which can only be good for the future of our industry. In 2026 and beyond, as different regions focus on innovating to meet the needs of their clients and communities, I look forward to working together to find financial and investment solutions which both achieve client goals and drive meaningful change in the world around us.
This article was co-authored by Lauran Halpin.
Lauran recently participated in a GEFI Insights Series Asset TV episode. Click here, to watch her discussion with TISFD’s Executive Director Simon Rawson and Amanda Zilig, Global Human Rights Programme Lead at ING.