ESG – the new Lord Voldemort
Sustainable investing was put to the test in 2025 – the political tailwind, which had already felt like a crosswind in Europe at times due to complex regulation, turned into a strong headwind. While sustainability continues to be successfully advertised in everyday consumer decisions, the abbreviation ESG (for the consideration of environmental, social and governance aspects in investments), which is commonly used in the investment sector, has become a no-go word in many places. It is comparable to Lord Voldemort, who only the very brave, such as Harry Potter, dare to call by his name.
Orange the World – away from the important UN campaign
The global UN campaign “Orange the World” has the important goal of drawing attention to violence against women and girls and in 2025 focused on violence in public, in the workplace and in the digital space. While this topic cannot get enough attention, the signal color orange unfortunately received even more attention in other areas: orange has not only been the head of state of the USA since 2025, but over 200 rivers in Alaska turned orange last year, triggered by the advancing global warming and thus the thawing of the permafrost. A signal for the end of sustainable investments?
What is sustainable investing?
Unfortunately, sustainable investing is often misunderstood – both by some NGOs and by politicians in the US. As we have always practiced at Erste Asset Management (since 2001, to be precise, with the launch of our first environmental fund), there are two levels of sustainable investing:
1. Portfolio level
Depending on the fund’s orientation—theme-specific, with a focus on renewable energies, for example, or global orientation without an industry focus—information on the sustainability of the business model is also included in addition to the information available to non-sustainable fund managers, and companies are evaluated in this regard in comparison to their competitors.
In addition, exclusion criteria must be observed both in terms of business practices (e.g., no child labor, no forced labor, etc.) and business activities (e.g., no tobacco, no gambling, no arms production, etc.) (details can be found in ourexclusion criteria.
While the focus on the best in the industry is intended to select the most future-proof companies, exclusions aim to rule out investment areas from the outset in which I, as an investor, do not want to be involved.
2. Impact level
If many investors follow this example, large capital flows will emerge that will put pressure on companies that are lagging behind in this regard to change. The problem, however, is that sustainable assessments are made individually by fund companies and investors, and capital flows alone do not provide company management with any recommendations for action.
This is where the (unfortunately often secret) superpower of investors comes into play: exercising voting rights at companies’ annual general meetings and engaging in direct dialogue with company management.
While US providers have massively reduced their support for sustainable shareholder proposals under political pressure, we at Erste AM have increased our capacity to bring about positive change. This means that our investors can not only invest capital, but also take responsibility and make a real impact—find out more in the sustainability section of our website.
Outlook 2026:
Orange mixed with blue and yellow makes green!
Anyone who remembers their first experiences with watercolors knows that orange mixed with yellow and blue results in green. This describes very well the main themes that will play a particularly important role for future-oriented investors in 2026:
Yellow like the sun
The renowned Science Magazine celebrated the global breakthrough of solar energy in its December issue. No other energy source can now compete with wind and solar energy in terms of cost and installation time – even taking battery costs into account. While the last few decades have been characterized by stagnating energy demand thanks to massive efficiency improvements in lighting, heating and cooling, the next few years are expected to see a massive increase in energy demand due to the electrification of transport (electric cars) and buildings (heat pumps), as well as data centers (artificial intelligence – AI). In 2026, Donald Trump will therefore either decide to continue his campaign against renewable technologies with the risk of further rising inflation from higher energy prices and the associated defeat in the mid-term elections in November, or to drastically change course. In contrast to AI, we were still a long way from euphoria on the capital market in 2025 despite the strong performance of renewable energies, which makes us particularly positive for 2026.
Note: Forecasts are not a reliable indicator of future performance. Investments in securities entail risks as well as opportunities.
As blue as the water
While we in Europe were previously familiar with the issue of water scarcity from television reports from other continents, global warming and the increase in extreme weather events (drought is followed by heavy rainfall that cannot be absorbed by the ground) are making it increasingly noticeable here too. This has financial implications for companies – there is no business model that can do without water, either directly or indirectly. Water scarcity can lead to both higher costs and a complete shutdown of production facilities or transportation. For this reason, we publish the water footprint of the companies invested in our sustainable funds every year on World Water Day and take this into account in our portfolio allocation.
The caterpillar becomes a butterfly
The silent pupation of the caterpillar before its transformation into a butterfly describes the environment for sustainable investing in 2025 and the positive outlook for 2026 quite well. Those who continue to address sustainability risks where they affect value creation – energy scarcity, water stress, loss of biodiversity, reputational and regulatory risks – will be fit for the future and need not fear ESG or Lord Voldemort in 2026.
Legal disclaimer
This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. The language of communication of the sales offices is German and the languages of communication of the Management Company also include English.
The prospectus for UCITS funds (including any amendments) is prepared and published in accordance with the provisions of the InvFG 2011 as amended. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in conjunction with the InvFG 2011.
The currently valid versions of the prospectus, the Information for Investors pursuant to § 21 AIFMG, and the key information document can be found on the website www.erste-am.com under “Mandatory publications” and can be obtained free of charge by interested investors at the offices of the Management Company and at the offices of the depositary bank. The exact date of the most recent publication of the prospectus, the languages in which the fund prospectus or the Information for Investors pursuant to Art 21 AIFMG and the key information document are available, and any other locations where the documents can be obtained are indicated on the website www.erste-am.com. A summary of the investor rights is available in German and English on the website www.erste-am.com/investor-rights and can also be obtained from the Management Company.
The Management Company can decide to suspend the provisions it has taken for the sale of unit certificates in other countries in accordance with the regulatory requirements.
Note: You are about to purchase a product that may be difficult to understand. We recommend that you read the indicated fund documents before making an investment decision. In addition to the locations listed above, you can obtain these documents free of charge at the offices of the referring Sparkassen bank and the offices of Erste Bank der oesterreichischen Sparkassen AG. You can also access these documents electronically at www.erste-am.com.
Our analyses and conclusions are general in nature and do not take into account the individual characteristics of our investors in terms of earnings, taxation, experience and knowledge, investment objective, financial position, capacity for loss, and risk tolerance. Past performance is not a reliable indicator of the future performance of a fund.
Please note: Investments in securities entail risks in addition to the opportunities presented here. The value of units and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your units. Persons who are interested in purchasing units in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is different than the investor’s home currency, changes in the relevant exchange rate can positively or negatively influence the value of the investment and the amount of the costs associated with the fund in the home currency.
We are not permitted to directly or indirectly offer, sell, transfer, or deliver this financial product to natural or legal persons whose place of residence or domicile is located in a country where this is legally prohibited. In this case, we may not provide any product information, either.
Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of the fund to American or Russian citizens.
It is expressly noted that this communication does not provide any investment recommendations, but only expresses our current market assessment. Thus, this communication is not a substitute for investment advice.
This document does not represent a sales activity of the Management Company and therefore may not be construed as an offer for the purchase or sale of financial or investment instruments.
Erste Asset Management GmbH is affiliated with the Erste Bank and austrian Sparkassen banks.
Please also read the “Information about us and our securities services” published by your bank.
More on the topic
Stock markets end turbulent year close to record highs
Trade conflicts, interest rate decisions, geopolitical tensions and the ongoing AI boom – 2025 had a lot in store for investors. Despite a turbulent year on the stock markets, the most important share indices close close to all-time highs. In today’s blog post, you can find out which sectors particularly shone in 2025 and which topics shaped the year as it drew to a close.
A new “D” in the D world
With the “Donroe Doctrine”, a new term is shaping the first few weeks of the year. Despite the geopolitical events, the markets are proving robust, which is probably also due to positive economic data. Read more about this in the latest commentary by Chief Economist Gerhard Winzer.