ESG Investing Trends in the UK for 2025

Published: March 15, 2025 | By Remy Investments

Environmental, Social, and Governance (ESG) investing continues to shape the UK’s financial landscape, driven by regulatory advancements, investor demand, and global sustainability goals. Established since 1959, Remy Investments offers over 66 years of expertise in helping you align your portfolio with sustainable growth. Here are the key ESG investing trends to watch in the UK this year.

1. Stricter Regulations Drive Transparency

The UK is reinforcing its position as a leader in sustainable finance with robust ESG regulations. The Financial Conduct Authority’s (FCA) Sustainability Disclosure Requirements (SDR), fully implemented in 2025, mandate clear labelling for funds using terms like “sustainable” or “green.” This ensures at least 80% of investments align with stated environmental or social goals, combating greenwashing. Additionally, the UK’s transition to align with global standards, such as the International Sustainability Standards Board (ISSB), will streamline corporate ESG reporting, giving investors clearer data to assess risks and opportunities.

Investor Tip: Look for funds with FCA-approved sustainability labels to ensure authenticity. Our advisors can guide you through compliant ESG portfolios.

2. Growth in Green Bonds and Sustainable Finance

Green bonds are surging, with issuances expected to exceed £1 trillion globally in 2025, and the UK playing a pivotal role. The European Green Bond Standard, effective from late 2024, has boosted confidence in UK markets, with oversubscribed issuances signaling strong investor appetite. These bonds fund projects like renewable energy and energy-efficient infrastructure, offering stable returns alongside environmental impact.

Investor Tip: Diversify with green, social, or sustainability-linked bonds for long-term stability. Contact us to explore bond opportunities tailored to your goals.

3. Focus on Social Factors and DEI

Social factors, particularly Diversity, Equity, and Inclusion (DEI), are gaining traction in UK ESG strategies. With younger generations (Gen Z and Millennials) entering decision-making roles, companies face pressure to prioritize fair labor practices, gender equality, and community impact. The Taskforce on Inequality and Social-related Financial Disclosures (TISFD), launched in 2024, will release a beta framework in 2025, standardizing social reporting. Investors are rewarding firms with strong DEI commitments, seeing them as resilient and future-proof.

Investor Tip: Evaluate companies’ social metrics, like workforce diversity and community engagement, alongside environmental scores. We can help integrate these into your portfolio.

4. Climate Transition and Net-Zero Investments

The UK’s commitment to net-zero by 2050 is driving investments in climate-transition strategies. Funds focusing on “transition” or “net-zero” must show measurable progress, such as reducing carbon footprints or scaling renewable energy. Despite global challenges, UK investors are capitalizing on sectors like electric vehicles, battery storage, and green infrastructure, supported by falling interest rates and technological advancements.

Investor Tip: Invest in transition-focused funds with clear decarbonization paths. Our team can identify high-potential opportunities in clean energy.

5. Technology Enhances ESG Decision-Making

Artificial Intelligence (AI) and data analytics are transforming ESG investing in 2025. UK asset managers are adopting AI-driven tools to assess carbon footprints, supply chain risks, and governance practices with greater precision. Platforms like Carbon Trail automate ESG reporting, helping firms meet regulatory demands and providing investors with reliable data. This tech-driven approach reduces greenwashing risks and enhances portfolio performance.

Investor Tip: Partner with advisors using advanced ESG analytics for data-driven decisions. Remy Investments leverages cutting-edge tools to optimize your investments.

Navigating Challenges in ESG Investing

Despite its growth, ESG investing faces hurdles. Scepticism persists, with some UK investors citing underperformance in green funds (e.g., 3.8% annual lag since 2019 in some cases). Political shifts globally, including anti-ESG sentiment in the US, may create market volatility. However, the UK’s regulatory clarity and investor demand—57% of UK investors hold ESG assets, led by 66% of Gen Z—signal resilience. By focusing on verified ESG strategies, investors can mitigate risks and capture long-term value.

Why Choose Remy Investments?

Established since 1959, Remy Investments offers over 66 years of expertise in understanding the evolving ESG landscape. Our expert advisors craft personalized portfolios that balance financial returns with environmental and social impact. Whether you’re exploring green bonds, net-zero funds, or DEI-focused investments, we’re here to guide you through 2025’s opportunities.