The course of capital markets has not reversed amid governments recalibrating their climate and sustainability priorities even as policy consensus has fractured, and public commitments are wavering, according to MSCI.
What was observed by investors are those that endure: the economics of the transition, the cost of inaction, and the data that continue to drive performance.
In its latest report titled “Sustainability and Climate Trends to Watch for 2026,” MSCI highlighted how these forces are shaping portfolios and capital allocation even amid changing political and economic conditions.
“As physical risks intensify and the global energy transition progresses, investors are sharpening their focus on insights that help differentiate risk, opportunity and long-term resilience,” said Anthony Chan, Vice President, APAC (Asia Pacific) Sustainability & Climate Research.
“The impact of technological maturity on the earnings of energy-transition players—and the potential for physical climate hazards to strain profitability—are now material considerations, even as sustainability and climate regulations continue to change,” he added.
For Southeast Asian investors, the financial stakes are substantial, as the region sits at the intersection of opportunity and risk— supplying key low-carbon technologies while facing some of the world’s greatest physical climate exposure.
“Looking ahead, company performance and risk profiles will increasingly hinge on how effectively firms adapt to these dynamics,” Chan said.
MSCI found that globally, including in APAC, technology maturity emerged as a key performance differentiator. Analysis of the MSCI AC Asia Pacific IMI shows that low-carbon revenue exposure alone was not a strong driver of returns, but the relationship strengthened materially when revenue exposure was adjusted for technology maturity and commercial readiness, which emphasizes proven, scalable technologies.
For investors, distinguishing between technologies that can scale economically and those reliant on regulatory momentum will be central to assessing both risk and opportunity in the energy transition.
Also for investors, physical climate risk has become too material to ignore, particularly in infrastructure, where assets are fixed, long-term and increasingly exposed.
Furthermore, while some policymakers are easing back on sustainability reporting requirements, prudential regulators remain focused on the financial risks stemming from climate change.
With those, investors are demanding comparable and financially relevant data.
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