A new paper from Aberdeen Investments has found that investor interest in sustainability is stronger than headline industry data suggests.
“Governance, transparency and business standards are now among the clearest drivers of investment preference,” said Aberdeen.
The findings appear in the firm’s new report “‘The Age of Grounded Sustainability: How sustainable investing is adapting to a more complex world – and what could come next.”
Its central conclusion is that sustainable investing is evolving, not retreating.
The report predicts that, by 2030, sustainability will be framed increasingly around resilience, security and competitiveness. Governance is expected to become the dominant ESG differentiator.
“This next phase will be shaped by targeted rather than universal policy support, as governments link sustainability goals more closely to industrial competitiveness, energy security and economic resilience,” said Aberdeen.
“For investors, this suggests stronger policy backing for electricity networks, electrification, critical minerals and defence-related technology. It also demands realistic expectations of what markets and governments can deliver. The focus is shifting from ESG labels to governance, resilience, climate transition and value creation.”
The report said artificial intelligence brings the sustainability trade-offs into sharp focus. In a survey of 2,000 UK adults conducted by Opinium Research for the firm, 46% said AI would do more harm than good over the next decade; only 20% expected a positive overall impact.
Around 43% said the concerns justify slowing AI’s expansion, compared with 22% who believe responsible management would allow the benefits to outweigh the risks.
Peter Branner, CIO, Aberdeen Investments, says: “The rapid adoption of artificial intelligence is perhaps the clearest illustration of the wider recalibration underway.
“It is a subject that inspires both extraordinary optimism and profound unease: promises of scientific breakthroughs and productivity gains sit alongside concerns about energy demand, social disruption, resilience and even humanity’s relationship with increasingly powerful machines.
“These questions affect us all. They also reinforce a central lesson for sustainable investing: progress is rarely linear, and trade-offs must be understood. We must remain alert to how AI develops and avoid locking capital into assets that could be stranded by technological change or the energy transition.”
Aberdeen Investments recorded £2.8 billion of net inflows into sustainable investment strategies in 2025. Momentum continued in 2026, with several significant discretionary sustainable mandates announced.
More than a third of its fixed income mandates now have a discretionary sustainability focus, reflecting growing demand for integrated approaches rather than standalone labelled products.
Aberdeen’s research found that 76% of UK retail investors expect sustainability to feature in business or investment decisions. In addition, 57% are interested in sustainable investment credentials and 55% think about sustainability when investing.
“Among practices investors would avoid, predatory lending ranked highest: 65% said they would avoid companies involved in it,” said Aberdeen. “This was followed by intensive farming (64%), tax avoidance (62%), poor business practices (61%) and animal testing (61%).
“The results point to a broader view of sustainability than fund-flow data alone suggests, mirroring conversations with clients. Investors are not abandoning sustainability; they are looking beyond labels and testing how environmental, social and governance factors shape investment decisions.
“Governance stood out. Nearly three-quarters (74%) of investors said high standards of business practice, including anti-corruption measures, matter when assessing companies. Tax transparency followed at 73%, strong corporate governance at 71%, and supply-chain standards and independent auditing at 67%.
“Environmental issues also remain important, with 66% citing environmental protection and 64% renewable energy as important considerations when assessing investments.”
Dan Grandage, Chief Sustainable Investment Officer, Aberdeen Investments, said: “The sustainability debate has evolved into what we call ‘grounded sustainability’. Investors increasingly see sustainability not as a separate theme, but as a lens for assessing risk, resilience and long-term value creation.
“Governance, energy security and technological change are becoming more financially material across asset classes. Retail and institutional investors alike are looking beyond labels to how these factors affect long-term outcomes and returns.
“Clients are focusing on specific themes such as climate transition, energy resilience and measurable outcomes. Demand for sustainable investing has not collapsed; it has become more selective and evidence-based.”
Stuart Riddick, Senior Sustainable Investment Manager, Aberdeen Investments, said: “In the recent proxy season, fewer environmental, social and governance proposals reached company ballots, and those that did generally attracted less support. But that should not be mistaken for retreat: the stewardship system is evolving in important ways.
“The growth of pass-through voting is giving asset owners greater control over how shares are voted, moving decision-making closer to end investors. We are also seeing a broader shift away from standardised voting approaches, with investors increasingly expected to take ownership of their stewardship policies and decisions.
“These developments may sound technical, but they have major implications for corporate accountability. Active ownership remains vital. Voting is only one part of effective stewardship, which also depends on sustained company engagement, research, challenge and oversight.
“As influence spreads across asset owners, asset managers and retail investors, preserving that culture of engagement will be essential to strong governance, long-term accountability and sustainable value creation.”