CIO identifies a number of transformational innovations that look set to shape global equity markets in the years to come. Each is closely linked to sustainability. Artificial intelligence, Power and resources, and Longevity, which represent CIO's three Transformational Innovation Opportunities (TRIOs), are all themes that invest in companies addressing challenges and opportunities across varied fields like resource efficiency, food and water security, and rising clean energy demand.
These topics align with the priorities driving the global sustainability transition, where investment momentum has been building. The International Energy Agency (IEA) has reiterated that to remain on a net-zero pathway, annual clean energy investment must increase to USD 4.5tr by 2030. A key theme from the 2026 Zurich Climate week was the key role of physical enabling technologies—particularly in power infrastructure—in supporting both decarbonization and adaptation. The electrification of industry, transport, and heating is accelerating demand for grid expansion and modernization. Investment is pouring into high-voltage cables, advanced
transformers, and grid optimization solutions, all of which are essential to integrate renewables, manage distributed energy resources, and enhance system resilience against extreme weather.
We expect companies supplying cables, transformers, switchgear, and grid management software to see robust growth, supported by regulatory tailwinds and public investment. These technologies are not only critical for emissions reduction, but also for ensuring energy security and climate resilience.
We therefore believe the secular case for investing in a sustainable portfolio approach—diversified across equities, bonds, hedge funds, and private markets—remains firm.
All major asset classes offer sustainable options, which historically have shown similar return characteristics to traditional investments, though risk characteristics differ particularly for alternatives. We believe that the longer-term performance of diversified sustainable investing strategies will be driven more by investment fundamentals and the economic environment than by politics.
Sustainable investors can put money to work depending on their intentions and objectives.
Equity options include:
- Strategies that predominantly invest in equities of issuers and assets providing solutions to sustainability or climate transition challenges;
- Engagement equity strategies that predominantly invest in equities of issuers demonstrating better operational sustainability or climate transition performance relative to peers;
- Strategies that look to generate progress by investing in equities of issuers that have potential to show improved sustainability or climate transition performance over time;
- Alignment strategies where equity fund managers actively engage with issuers with the aim of driving progress on sustainability or climate transition-related topics.
Fixed income options include:
- Strategies that predominantly invest in bonds of issuers demonstrating better operational sustainability or climate transition performance relative to peers;
- Strategies where bond fund managers actively engage with issuers with the aim of driving progress on sustainability or climate transition-related topics;
- Strategies that invest predominantly in bonds issued by multilateral development banks, such as the World Bank, directly or via managed solutions. Proceeds are directed with the intent to generate positive environmental or social impact through development finance;
- Thematic fixed income strategies that invest predominantly in bonds that finance environmental or social projects and activities, as well as a transition process toward stronger sustainability credentials (including green, social, sustainable and sustainability-linked bonds);
- Municipal bond strategies that invest predominantly in municipal bonds whose proceeds are designated to fund projects with social or environmental objectives;
- Strategies that invest predominantly in securitized bonds like mortgage-backed securities where the underlying pools meet social or environmental criteria;
Emerging markets finance strategies that predominantly comprise fixed income and currency solutions to provide private funding in emerging markets and support the efforts of development finance institutions.
In alternatives, risk-tolerant investors can consider sustainable hedge funds. Such funds incorporate ESG factors into their investment processes, aiming to exploit market inefficiencies related to ESG issues. They thus may offer differentiated investment opportunities.
And in private markets, we believe impact investments in climate technology that aim to help companies meet their decarbonization commitments reduce overall greenhouse gas emissions and drive the overall transition to a low-carbon economy represent a significant investment opportunity.
Nonetheless, private market investors need to consider risk factors like leverage, potential defaults, and concentration risks. Investing in private market vehicles also requires a tolerance for illiquidity and comes with limited disclosure and control over holdings.
Some investors may seek impact investing, a subset of investment solutions, where investors actively fund or engage with investments to generate measurable, verifiable, positive environmental or social impact alongside competitive financial returns.
