Sustainable Investing

Sustainable investments have evolved from a niche product to a mass market. The global market for ESG investment analysis reached a volume of 30 trillion US dollars in 2024, as determined by Verified Market Reports. The forecast for 2033 is 50 trillion US dollars – this corresponds to an average annual growth rate of 6.5 percent for the period 2026 to 2033.

Key Points

• The global market for ESG investment analysis reached a volume of 30 trillion US dollars in 2024 and is expected to grow to 50 trillion USD by 2033 (Source: Verified Market Reports)
• Impact investing refers to investments that achieve measurable social or environmental impact alongside financial returns
• Starting from fiscal year 2026, small and medium-sized capital market-oriented companies must apply Sustainable Finance regulation
• The EU Taxonomy Regulation, together with the CSRD and SFDR, forms the central pillars of European sustainability regulation
• Finance-First and Impact-First strategies differ in the weighting between returns and impact

What are sustainable investments?

The Forum Sustainable Money Economy (FNG) defines sustainable investments as "sustainable products and investment vehicles that explicitly consider ecological, social and governance-related aspects (ESG criteria) in their investment terms". ESG stands for Environmental, Social and Governance – these three criteria form the standard for sustainable investment decisions.

The Federal Environment Agency, however, points out that this definition does not make statements about the actual ecological or social level of ambition of the corresponding investments. The available market data from the German Association for Investment and Asset Management (BVI) therefore provides only initial guidance on the volume of sustainable investments in Germany.

Impact Investing: Returns with Measurable Impact

Impact investing has established itself as a significant investment approach and is in particular focus in 2026. As Invesdor explains in an analysis from March 2026, impact investments are investments that, alongside financial returns, also achieve measurable social or environmental impact. This approach is gaining importance against the backdrop of volatile markets, inflation and geopolitical tensions.

Two Strategic Approaches to Impact Investing

In impact investing, two fundamental strategies can be distinguished:

Finance-First Strategy: Investors aim to achieve both financial returns and positive changes in the social and environmental areas. The UN Sustainable Development Goals serve as the foundation and thematic framework. Union Bancaire Privée (UBP) aligns its impact strategies with this approach and focuses on 15 of the 17 UN Sustainable Development Goals.

Impact-First Strategy: Here, impact is at the centre of the investment decision. Financial returns continue to play a role but may be subordinate to the intended social or environmental impact. This approach suits investors willing to forgo part of their returns to achieve maximum positive impact.

Regulation: New Obligations for SMEs from 2026

European Sustainable Finance regulation reaches a new level in the current year 2026: As the German Chamber of Commerce and Industry (DIHK) reports, small and medium-sized capital market-oriented companies must apply Sustainable Finance regulation for the first time from fiscal year 2026 – with the option to defer the first application if necessary. Large companies have been obligated since fiscal year 2024.

The EU Taxonomy Regulation, together with the Corporate Sustainability Reporting Directive (CSRD) and the Disclosure Regulation (SFDR), forms the central pillars of the European Sustainable Finance framework, as documented by the German Sustainability Code. This regulation affects numerous sectors: energy, transport, construction, industry, and environment and forestry. The European Commission has published a consultation on the revision of the EU Taxonomy, with the final revision of the criteria scheduled for summer 2026.

Sustainable ETFs in 2026

Exchange Traded Funds (ETFs) – stock exchange-traded index funds – are also playing an increasingly important role in the sustainable segment. According to the portal Sustainable Investments, seven factors are of particular importance for investors in 2026, which are analyzed in an ESG ETF ranking. ETFs offer the advantage of broad diversification and comparatively low costs, but the sustainability level of individual products varies considerably.

Market Outlook and Challenges

The projected growth of 6.5 percent annually through 2033 shows that sustainable investments are experiencing a structural upward trend. However, the question of the actual impact of ESG investments remains central. The FNG definition deliberately leaves open how ambitious the sustainability criteria of individual products are.

Investors in the DACH region should therefore carefully examine what specific ESG criteria a financial product applies and whether these align with their own values. The increasing regulation through the EU Taxonomy and CSRD is likely to lead to greater transparency and comparability in the medium term – an important step for a market that has so far been characterized by very different standards and definitions.