S&P Global's Top 10 Sustainability Trends to Watch in 2026

The world is heading towards an increasingly fragmented, multiregional approach to action on sustainability as divergent approaches to energy and climate by the world’s largest economies dominate the narrative.

This fragmentation is particularly pressing for emerging markets and developing economies, which are disproportionally vulnerable to extreme weather events and face challenges accessing financial resources to support investment in adaptation and resilience. The global picture is becoming increasingly complex with continued geopolitical conflict, rapid development of AI, aging global populations and the emergence of new regional powers.  

The shift away from multilateralism will put further spotlight on the stark policy differences between the world’s two largest economies — the US and China — on issues of international trade, energy and climate policy. Take, for instance, energy exports: Global fossil fuel demand has been rebounding strongly post-COVID-19, and fossil fuels are expected to remain a significant portion of total global primary energy demand over the coming decades. The current US administration has committed to maximizing sales of fossil fuels. For energy importers, reliance on imported fossil fuels can offer continuity of financing and infrastructure systems but requires long-term, stable trade relationships. For energy importers, reliance on these relationships can carry risk — a risk that has been heightened by the unpredictable implementation of tariffs by the US. 

Solar and wind generation make up a significantly smaller share of the current demand picture, but show significantly stronger rates of growth. In S&P Global Energy’s base case scenario, global fossil fuel demand is expected to grow less than 1% in 2026 relative to 2025 levels while solar and wind generation will grow more than 17%. Reliance on new solar and wind — and global clean energy technology and critical minerals more broadly — implies reliance on China, at least for now, as the country continues to invest heavily to maintain control over growing supply chains. While China is operating under a predictable and clearly stated long-term strategy, reliance on China also carries risks, as seen in its imposed controls on rare earth exports.   

These divergent energy strategies align with similarly disparate efforts to influence global climate policy. China, for example, recently announced its first absolute greenhouse gas emissions mitigation target, even as the nation remains the world’s largest annual source of GHG emissions. Meanwhile, the US has withdrawn from the Paris Agreement on climate change and the United Nations Framework Convention on Climate Change (UNFCCC), and members of the International Maritime Organization have postponed a global fee on shipping emissions following vigorous US opposition. Even amid this broad global divergence on trade, energy and climate policies, many parts of the world will continue to pursue climate, nature and sustainability priorities in their own manner — as the trends that follow explore in more detail.

Energy expansion and sustainability will develop as intertwined imperatives shaping an increasingly fractured global energy future.

Expectations for recovery in global energy demand have confounded expectations; fossil fuel demand has been rebounding faster than expected, along with growth in renewables. Explosive AI growth is dominating the narrative, dramatically increasing power demand, straining grids and challenging sustainability goals heading into 2026. Data center electricity consumption could top 2,200 TWh by 2030, comparable to India’s power usage. Grid modernization and expansion are critical bottlenecks for energy security and competitiveness, requiring investments amid affordability concerns.  

In 2026, we anticipate the first year-over-year decline in global solar additions, driven by a sharp slowdown in China. While we expect growth to continue, the era of uninterrupted expansion is ending, prompting industry consolidation and strategic pivots. Increasing renewable capacity is causing low and negative wholesale power prices, driving a shift to flexible, hybrid power purchase agreements and greater use of battery storage. Data centers remain the largest buyers of clean power.

Moving from electrons to clean molecules, while most of world is reassessing hydrogen, 2026 will see China rapidly scale green hydrogen production and exports, leveraging policy support. Electrolyzer costs are falling, and Chinese firms will be exporting both technology and clean molecules, positioning China as the global leader. Global sustainable aviation fuel capacity will grow by a third in 2026, led by Asia, but the market remains small. Most future sustainable aviation fuel capacity is still awaiting investment decisions, and scaling up will require overcoming technical and supply chain hurdles.

Continued uptake of electric vehicles will drive road transport decarbonization in 2026, with China achieving price parity with internal combustion vehicles and exporting price deflation. EV uptake in Europe is reviving as CO₂ standards continue to shape the market, while the US faces a test as federal subsidies end. Policy and market openness will shape adoption in emerging economies.

Global trade and climate policy increasingly focus on harmonizing emissions reporting, with 2026 advancing industry efforts and GHG Protocol Scope 2, impacting corporate clean power strategies. The EU Carbon Border Adjustment Mechanism (CBAM) usher in a new era starting Jan. 1, imposing costs on imports based on carbon intensity, complicating trade and driving international debate.

The rapid expansion of AI-driven data centers will put pressure on energy supply, emissions and water availability, attracting increasing public attention.

The data center boom driven by AI and cloud services demand shows no sign of stopping. Demand for capacity in the AI race means the industry's power consumption is projected to nearly double between 2024 and 2030, with water use for cooling expected to follow a similar trend. Major firms have pledged net-zero goals, but rising AI energy demand, as laid out in the previous trend, may force greater fossil fuel use and make these targets harder to achieve. Although high-profile tech companies such as AWS, Microsoft and Google have made ambitious sustainability commitments, the picture is not uniform across the sector. Data from the 2024 S&P Global Corporate Sustainability Assessment shows that 38% of assessed companies with data center operations lack a net-zero commitment.

Headwinds are becoming clearer and could present a barrier to unconstrained growth. The exponential growth of the data center industry will lead to higher power grid emissions and water stress in regions where data centers are located, even if individual entities achieve their decarbonization and water stewardship goals. With demand outstripping the ability to deploy renewable power, the tide has turned from energy transition to expansion. In some instances, this has meant legacy gas and coal power being brought back online and decommissioning plans being put on hold.

In some areas with high data center demand, there are reports of power prices increasing, leading to questions about who pays for additional infrastructure. In the US in particular, development could face significant water constraints in the long term, with states such as Arizona, California and Colorado facing higher stress levels.

The situation is dynamic and likely to become more political. This issue has already featured in 2025 state and local elections in the US, suggesting these broader impacts are becoming key issues for voters. Hyperscalers are warning that local opposition to data centers is on the rise as pressure grows on power prices, water availability and jobs. With the data center industry's growth poised to accelerate, it will be increasingly crucial for stakeholders to address these intertwined challenges as the sector aims to deliver on ambitious growth plans.

Water will be increasingly visible in sustainability conversations, driven by a boom in water-intensive data centers, rising water scarcity risks tied to climate change, and dependence on freshwater access across industries and food systems.  

As climate change intensifies, drought, flooding and water stress are projected to increase in many regions. Even under a climate change scenario in which strong global action is taken to lower emissions (SSP2-4.5), companies in the S&P Global 1200 could see the total annual cost of climate physical risk reach $1.2 trillion by 2050, with water stress projected to be the second-largest contributor to those costs at $265 billion.

Water is a key resource across most sectors; two-fifths of countries’ gross value added relies on water, with agricultural activities the most dependent. As water pressures increase, food systems become more vulnerable. Security of water supply for agricultural goods is rapidly becoming a top strategic issue for executives in the food value chain. Competition for water is likely to become a stark reality, particularly in locations where economic growth, people and nature rely on limited water resources.

At the same time, water-intensive industries are booming. Global data center power demand is projected to nearly double between 2024 and 2030, with 43% of existing data centers already located in regions of high water stress, according to S&P Global. In China and the US — global leaders in data centers by power demand — about 60% and 38% of assets, respectively, are projected to be exposed to high water stress this decade.

Water-related issues could come to a head in 2026, particularly in terms of climate hazards and adaptation. In 2025, major droughts have already pushed some parts of the world, including the Middle East, to deal with water shortages. Climate change is projected to make these kinds of events more frequent and more severe.

Financial impacts from water-related risks could increase, absent adaptation and resilience investments. We expect continued development of water-focused financing instruments, catering to impact investors trying to offer ways to solve this integrated resource management challenge at a system level. With water risks top of mind, water finance is a tangible entry point for scaling nature-related instruments and encouraging related-risk disclosures across sectors.

We expect to see water rise on the agenda for companies in terms of risk management and investment opportunities alike.

The spotlight is shifting away from sustainability risks, leaving supply chain vulnerabilities in the dark.

In 2026, persistent trade tensions and protectionism combined with a dwindling appetite for supporting sustainability through policymaking will mean that climate and sustainability-related supply chain risks receive less attention. Companies seeking to address their supply chains’ vulnerability to drought, extreme heat, storms or other climate hazards may need to recast these events as basic facets of risk management and resilience. And supply chain workers may face enhanced vulnerabilities to abuse and exploitation as regulatory imperatives to monitor and manage supply chain human rights risks decelerate.

The policy front for supply chain sustainability will remain in flux throughout 2026. The EU, which has raised the bar on supply chain disclosure regulations with global ramifications, is tapering some of its policies while forging ahead with others. Its due diligence rule and deforestation regulation would introduce an unprecedented level of supply chain monitoring and disclosure for companies with complex supply chains. However, the EU’s simplification efforts, set to continue throughout 2026, mean that companies will have to watch carefully for decisions on implementation deadlines and the scope of applicability.

Meanwhile, CBAM — a fee placed on key goods such as aluminum, cement or steel imported to the EU based on the good’s embedded emissions — went into full effect Jan. 1. S&P Global analysis indicates at least $15 billion in added import cost of goods originating in more carbon-intense countries, which could begin reshaping supply chains by encouraging EU importers to pivot to suppliers with smaller carbon footprints.

Supply chains central to the tech sector and the energy transition will have clear bearing on geopolitics in 2026. Critical minerals such as copper, lithium and rare earths enable electrification, clean energy and the AI-fueled data center boom. Access to these materials is likely to be a key element of trade diplomacy, and extracting and processing these fundamental raw materials will be a driver of global investment trends. China is set to remain the world’s top producer of cleantech components such as solar photovoltaic panels, making it a compelling trade partner for parts of the world seeking to boost renewable energy production, particularly Africa.

Meanwhile, the specter of more frequent and severe climate hazards will continue to threaten supply chains, which often span parts of the world where climate costs are rising the fastest and where investment in adaptation and resilience lags.

The continued decline in biodiversity and nature's services can become a barrier for economic growth, but also creates investment opportunities to transform economic activities.  

Nature loss is increasingly becoming financially material as land available for economic activity diminishes alongside a reduction in nature's capacity to provide ecosystem services. These services include wood for timber harvest, ground water or fresh water for drinking and irrigation, and animal or plant fibers for fabrics or fertilizer. Nature also regulates climate processes via carbon sequestration and supports climate adaptation via erosion control and flood and storm protection. When nature is degraded — for example, through land-use changes such as new real estate developments or agricultural expansion, unsustainable resource exploitation such as overfishing, or from climate hazards — these ecosystem services are reduced. As the resilience of ecosystem services declines, economic growth potential can be compromised. 

The advance of cross-border standards and regulations also increases the financial materiality of nature loss. After delays in 2025, the EU's deforestation regulation (EUDR), is expected to become effective for larger companies by the end of 2026 and mid-2027 for smaller and medium-sized companies (those with 250 or fewer employees on average during 2026). EUDR requires businesses selling agricultural commodities in or through the EU to demonstrate that products don't come from deforested land or contribute to forest degradation.

The International Sustainability Standards Board (ISSB) is expected publish an exposure draft for its nature-related disclosure standard to coincide with COP17 in October 2026 in Armenia. Dozens of countries have adopted or indicated they plan to adopt the ISSB's existing two sustainability standards.

At the corporate level, pledges to protect nature remain limited. Only 8% of companies globally assessed in the S&P Global Corporate Sustainability Assessment have a biodiversity protection commitment. Looking ahead, we expect more companies to measure their dependence and impact on nature and to set related goals. That should support investors' measurement and reporting of the nature impact of their portfolios, which is also advancing.

Companies and investors will navigate a significantly altered and uncertain landscape for reporting and regulation amid a push to roll back sustainability rules.  

Drastic changes to the EU’s sustainability reporting framework along with legal challenges to climate disclosure rules in the US will continue to create legal uncertainty for investors and companies in 2026. Further tensions will appear as some jurisdictions pull back from sustainability reporting while others respond to investor demand for greater transparency.

An effort by the European Commission to simplify key reporting rules such as the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) will be more significant than initially expected, reducing the number of companies required to report and shrinking the amount of sustainability information available to the market. In the US, legal challenges to one of California’s climate disclosure laws highlight the potential for resistance to sustainability reporting in some markets.

However, we expect companies will continue to embrace sustainability reporting using existing voluntary standards like those of the Global Reporting Initiative. Investors are increasingly recognizing that sustainability risks can be financially material and thus are seeking disclosures to help them price risk. Sustainability reporting based on ISSB disclosure standards will become mandatory in some jurisdictions such as Chile, Nigeria, Brazil and Mexico. Other jurisdictions such as China, Malaysia and the Philippines will phase in sustainability reporting, reflecting a regulatory push in a region heavily impacted by climate change.

Increasing convergence with global standards is likely as EU amendments to sustainable reporting standards may result in greater alignment with the ISSB standards. Nature-based reporting will take on more prominence following the ISSB’s decision to focus on nature-related risks and opportunities, drawing on the work of the Taskforce on Nature-related Financial Disclosures (TNFD).

Companies are entering a regulatory environment fraught with tension in 2026. Investors seeking consistent and comparative sustainability information will continue to demand disclosures to avoid investment risk, while companies that have invested heavily in embedding sustainability in their strategies are unlikely to entirely change course.

Financing needs for sustainable economic development will intensify alongside competition for capital.

Adaptation and resilience are among the top sustainability topics we are watching in 2026, and we expect adaptation investments as well as pressures on insurance costs and availability to rise across developed and developing economies alike. Financing needs for adaptation in the face of physical climate risks are 12-14 times greater than current flows, according to the 2025 UN Environmental Programme’s Adaptation Gap report.

As official development aid continues to decline, blended finance solutions, private and domestic capital market mobilization in emerging and developing economies, and additional lending from multilateral lending institutions (MLIs) will likely all be needed to bridge sustainable development funding gaps. G20 initiatives, World Bank guarantee revamps and transparency efforts by MLIs aim to accelerate MLI balance sheet expansion rates from the modest 4% seen between 2021–2024. Standardized and replicable financing structures and funds with credit risk diversification might be key to achieving the $1.3 billion annual climate finance target for developing countries set at COP29.

Transition finance has an opportunity to break to the fore in 2026, from the slower 2025 sustainable debt market. Labeled loan and bond standard-setters have published transition guidelines for projects in high-emitting sectors that reduce carbon emissions in the short term. Such projects may align with local sustainable finance taxonomies, which could benefit from harmonization ambitions announced at COP30.

Broader and rising carbon pricing across economies, with 28% of emissions currently estimated to be covered by some form of carbon pricing, has potential to support decarbonization solutions while raising government revenues. Generating carbon credits from green projects, including nature conservation ones, could help developing economies raise financing. Rising blended finance ambitions extend to nature projects, with the Tropical Forest Forever Facility (TFFF) aiming to raise $4 billion annually for projects across 74 emerging markets.

Still, global coordination to incentivize investment will present a challenge amid trade policy uncertainty. And sustainable development objectives will continue to face heightened competition for financing with defense, security and technology to support AI infrastructure diverting much available capital.

Global population aging will put increased pressure on labor markets, with AI-driven productivity enhancements and migration unlikely to provide relief.

Global populations are aging, particularly in advanced economies. Many of the most profound economic and financial impacts are likely to be transmitted through the labor market. The United Nations estimates that in 2026 the proportion of the world’s population aged 65 or older will surpass 10.5%, up from less than 8.5% a decade earlier. Meanwhile, the old age dependency ratio (or size of the elderly population relative to the working-age population) is increasing in all but the lowest income countries.

In the US, more than 4 million Americans will turn 65 in 2026 as the baby boomer generation nears peak retirement age. This occurs at the same time that the number of Americans turning 18 is projected to begin an extended period of year-over-year declines, marking the beginning of what has been termed a “demographic cliff.”

And while the impacts of population aging may be of most immediate concern in advanced economies, many emerging markets, particularly in East and Southeast Asia, are likely to see the most rapid aging and dramatic increases in old age dependency ratios over the next decade.

In 2026, we expect this intersection of global aging and labor markets to be a pivotal issue as productivity enhancements from AI or other automation technologies are unlikely to adequately offset the large cohort of individuals expected to exit the labor pool. In addition, the geopolitical environment is unlikely to support more accommodative open immigration policies.

Without these mitigating forces, the potential impacts of population aging on labor markets could acutely affect subnational governments as healthcare, pensions and social service obligations grow in the face of declining workforce ratios. And private entities, particularly in sectors such as healthcare services that face increased demand from aging populations, could face mounting labor scarcities, skills deficits and costs.