Today’s crises cannot derail tomorrow’s opportunities

Geopolitical tensions, economic uncertainty and a succession of global disruptions have combined to make the past 18 months a uniquely challenging period for investors and corporates alike.

But while this environment of shifting narratives and constant headlines has at times made markets difficult to navigate, the case for looking beyond the short-term noise – and focusing on the structural trends shaping the global economy – remains as strong as ever.

Nowhere is debate more acute today than over the pace of the energy transition and the growth prospects of sustainable finance. Yet, despite elevated scepticism, a closer look at the fundamentals suggests positive inflection points have been reached across both trends.

Transition economics remain compelling

The energy transition continues to be driven by increasingly favourable economics, with the costs of renewable energy technologies having declined significantly over the past five years.

Combined with battery energy storage systems (BESS), solar and wind power have become, in many markets, among the cheapest and fastest ways to add new electricity generation capacity.

Renewable energy also mitigates volatility in fossil fuel prices and the very availability of energy – as evidenced by the recent hostilities in the Middle East and the subsequent closure of the Strait of Hormuz. Today, energy importers are facing a fundamentally changed incentive structure.

This new reality is increasingly recognised by businesses as well. Companies facing rising energy demand are turning to renewable energy and storage solutions as practical, cost-effective ways to secure their future power supply.

Even before the recent conflict surrounding Iran, and despite concerns about slowing momentum, renewable energy investment and deployment trends were strong. In 2025, Texas surpassed California in large-scale solar generation, while the US added record levels of wind, solar, and energy storage capacity. At the same time, China continued to expand renewable energy capacity at a pace exceeding that of the rest of the world combined – driven by both energy security and economic considerations.

These developments illustrate that the energy transition is not dependent on a single market or policy framework. It is increasingly supported by broad economic and industrial drivers, as well as risk management concerns across major economies.

Sustainable finance is still firmly established

In Europe, discussions around regulatory simplification have sometimes been interpreted as a weakening of climate ambitions. In reality, the debate is increasingly focused on improving implementation while preserving the long-term objectives of the transition.

Key frameworks such as the European Emissions Trading System (ETS), the regulation on deforestation, and the Sustainable Finance Disclosure Regulation (SFDR) – even if amended to varying degrees – look set to remain central pillars of Europe’s climate and sustainable finance agenda.

While retail flows into ESG products have moderated over recent years, institutional demand for responsible investment expertise remains robust. This reflects the continued integration of sustainability considerations into long-term investment processes.

Indeed, periods of uncertainty often amplify short-term narratives and noise. But the underlying drivers of the energy transition and sustainable finance – improving economics, continued global deployment and institutional support – have not weakened.

For long-term investors, distinguishing between temporary sentiment shifts and structural trends remains essential. In a world of ongoing crises, resilience is built not by reacting to every headline, but by maintaining focus on the long-term forces shaping future value creation.