• Nearly 60% of global investors are using or planning to use AI in sustainability and investment analysis, with trust now the primary barrier to scale
• 89% expect regulatory divergence across jurisdictions to complicate cross-border investment strategies, while fewer than 30% feel ready for 2026 disclosure rules
• 55% say extreme weather events are already influencing investment decisions, accelerating demand for near-term climate risk analytics

Global investors are entering a more demanding phase of sustainable finance, where climate risk is moving markets in real time, regulation is tightening but diverging, and technology is becoming central to investment decision-making. That is the picture emerging from Clarity AI’s Investor Sustainability Pulse 2025, a new survey of more than 120 asset managers, asset owners, and financial institutions across North America, EMEA, and APAC.

The findings point to a market that remains committed to sustainable investing but is grappling with rising complexity. Investors are navigating fragmented regulatory regimes, growing scrutiny over ESG claims, and the physical impacts of climate change, all while under pressure to deliver decision-useful insights at speed and scale.

H3 AI Moves From Experimentation to Core Investment Infrastructure

AI adoption is accelerating as investors seek practical tools to manage growing volumes of sustainability data. According to the survey, 57.8% of respondents are already using AI in sustainability or investment analysis or plan to do so within the next 12 months, indicating a shift from pilot projects to mainstream workflows.

The most common use case is sustainability data collection and processing, cited by 66.9% of respondents. This reflects the challenge investors face in consolidating inconsistent, multi-jurisdictional disclosures while meeting regulatory and client expectations.

Yet the survey shows that adoption at scale is not guaranteed. Accuracy is the dominant concern for investors, flagged by 68.6% of respondents, followed by transparency and explainability at 37.2%. Most respondents see AI as an augmentation tool rather than a replacement for human expertise, with 59.5% expecting AI to support analysts and only 24.0% anticipating substitution.

“Investors want AI to turn fragmented sustainability information into decision-useful insight, faster and more consistently across portfolios. But trust is the gatekeeper: if results can’t be verified and explained, they won’t scale. The next wave of adoption will go to tools investors can validate and stand behind,” said Lorenzo Saa, Chief Sustainability Officer at Clarity AI.

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H3 Regulatory Fragmentation Exposes Preparedness Gaps

Regulation is reshaping sustainable investing from the outside in, but investor readiness remains uneven. Only 28.9% of respondents say their organizations are fully prepared for 2026 sustainability disclosure requirements, while 56.2% report partial readiness or a lack of preparedness.

The survey responses were collected before the publication of the SFDR 2.0 proposal, meaning the subsequent regulatory overhaul is likely to add further near-term complexity as firms adjust to evolving requirements.

At the same time, 89% of investors expect cross-border regulatory divergence to complicate global investment strategies. For multinational portfolios, comparability across frameworks is becoming a strategic necessity rather than a compliance exercise, raising the stakes for governance, data consistency, and reporting controls.

H3 Climate Risk Becomes a Near-Term Market Driver

Climate risk is increasingly treated as a present investment variable rather than a long-term scenario. Investors cite transition risk, at 58.7%, and physical risk, at 50.4%, among their top concerns, reflecting deeper integration of climate considerations into portfolio construction and risk management.

Extreme weather events are already reshaping market behavior. More than half of respondents, 55%, say floods, wildfires, and heatwaves are affecting investment decisions more than in previous years. The result is rising demand for analytics that capture near-term exposure, asset resilience, and geographic vulnerability across portfolios.

H3 ESG Demand Holds Firm Under Greater Scrutiny

Despite louder public debate around ESG, investor demand remains resilient. Around 51.2% of respondents expect client demand for sustainable investment products to increase over the next year, while 39.7% expect it to remain stable.

What is changing is how sustainability is communicated. Nearly two-thirds of investors report adjusting their language and positioning. About 43.0% tailor messaging by market, 23.1% use alternative terminology, and 12.4% limit sustainability communication altogether, reflecting heightened scrutiny and a tougher environment for credibility.

“The next phase of sustainable investing is about accountability. Expectations are rising for corporates, investors, and policymakers alike, and sustainability can’t sit on the sidelines, it has to be integrated into investment decisions. AI will help investors keep pace, but only if it’s adopted strategically, with the right specialization and governance to earn trust at scale,” Saa added.

As regulatory fragmentation deepens and climate impacts intensify, the survey suggests that sustainable investing is not retreating but maturing. For global investors, success will depend on governance discipline, credible data infrastructure, and the ability to translate sustainability complexity into investment insight that can withstand scrutiny across markets.

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