ISS STOXX 2026 Global Outlook Report Identifies Key Sustainability Risks and Opportunities for Investors

NEW YORK (December 15, 2025) — ISS STOXX, a leading provider of comprehensive and data-centric research and technology solutions that help capital market participants identify investment opportunities and risks, today released its annual global outlook report, Actionable Insights: Top Sustainability Themes in 2026. The new report draws on comprehensive ISS Sustainability Solutions data, with insights from ISS STOXX’s research analysts, climate-risk specialists, and regulatory experts to help investors identify the key sustainability trends in 2026.

Of note, the report includes an innovative physical risk and business continuity analysis of data centers. This analysis uses the new ISS STOXX Geospatial Asset Analytics offering, developed in light of the recent acquisition of Sust Global, which helps investors identify and quantify physical climate-related risks to real assets using advanced geospatial-AI climate models, the ISS Sustainability Solutions Corporate Rating, which evaluates sustainability-related risks and opportunities along the corporate value chain, and Climate Transition Ambition and Credibility Analytical tools.

Key global trends identified by ISS STOXX that sustainability-focused investors may be considering through 2026 include the following:

• Preparing for the Climate Transition: Investors face two distinct questions about the climate transition: how exposed are companies to climate risks, and how prepared are they to navigate those risks? Analyzing governance, disclosure, and implementation indicators, in addition to emissions data for over 8,000 public companies shows that exposure and readiness do not align. Only 17 percent of companies are considered “Best Positioned,” because they meet their carbon budgets and, at the same time, demonstrate strong governance and operational readiness.
• Physical Risks and Business Continuity: Data centers are vulnerable to climate change-related disruptions such as water stress and heat waves.  A sample of 100 data centers across 25 countries and diverse climate zones offers a global snapshot of exposure to climate and nature-related physical risks. Analysis using ISS STOXX Geospatial Asset Analytics projects that, under a high emissions scenario, data centers will be progressively exposed to higher levels of both heatwave and water stress risk: 43 data centers face medium or high risk in the next 15 years, rising to 64 over 30 years. Heatwaves increase cooling demands and contribute to outage risks, operational costs, and the need for infrastructure upgrades.
• Imperatives of AI Governance: As companies accelerate the adoption of generative and predictive AI, AI governance is likely to remain a top concern for investors. One interconnected framework for sustainable AI governance consists of the triple imperative: Ethical AI (the “Why” of AI), Responsible AI (the “How”), and Just AI (the “Who”). Ethical AI reflects a broad set of values and principles, such as data protection or transparency, aimed at enhancing AI’s beneficial impact while reducing risks. Responsible AI defines how these principles are operationalized, and a Just AI transition focuses on AI’s societal and economic impacts, with the goal of fair and balanced outcomes for all stakeholders. Global research and corporate disclosure from the leading technology companies, known as the “Magnificent 7,” shows that most of these companies articulate Ethical AI values, but few operationalize them through Responsible AI governance frameworks or address the human implications central to a Just AI transition.
• Due Diligence on Labor: Multinational companies must often navigate a range of labor regulations directly applicable to their own operations while also conducting effective due diligence over their suppliers. Failure to do so carries significant reputational and financial risks for companies and, by extension, their investors. Trying to evaluate corporate due diligence on labor is complicated by a variety of factors, such as the applicability and relevance of different labor regulations across sectors and industries and the evolving and sometimes overlapping nature of such regulation. Nevertheless, labor regulation in several jurisdictions is moving toward more stringent due diligence requirements for companies. Data from the ISS STOXX Corporate Ratings show significant room for improvement across all labor-related disclosures under the Supplier Social Standard. Particularly notable are low disclosure levels relating to working time (13 percent), documentation of wages (10 percent), and living wages (6 percent). The report also notes that, while most companies have a supplier labor policy (63 percent), less than half (42 percent) have contractually binding policies. Low levels of disclosure expose these companies to reputational, legal, and financial risks.
• Sustainability Resilience amid Policy Uncertainty: The year 2025 was marked by an unprecedented rise in global economic policy uncertainty, however evidence indicates that sustainable investment remained largely resilient in 2025. This relative strength is evident in sustainable ETF flows globally, which have continued to grow at a rate comparable to the overall global ETF market. Based on ISS MI MarketPulse data, Sustainable ETF AUM as of September stood at $631 billion, up 18 percent since December 2024. Furthermore, while results differ across index methodologies, sustainability indices have often shown resilience and sometimes outperformance. Publicly available STOXX indices indicate that year-to-date performance ending October 31, 2025, of Europe 600-based indices such as ISS STOXX ESG Climbers, have outperformed the benchmark, while others, such as PAB/CTB climate indices, have underperformed.  Looking ahead, additional tools are available to navigate potential opportunities and risks stemming from policy and sustainability developments in 2026.

“Pragmatism in the sustainable investment space is the major theme that will likely shape 2026, as investors continue to expand and refine the business case for sustainability,” said Mirtha Kastrapeli, Managing Director, Global Head of ISS STOXX Research Institute. “With investors likely focusing on climate preparedness and the growing consideration of physical risk in decision-making, the governance of AI, and global regulatory developments around labor rights, access to more granular and precise data, more rigorous climate and physical risk models, and deeper industry-specific insights will help investors assess the impact these issues have on their portfolio companies’ bottom line.”

To download a copy of the full report, please click here.

###

About ISS STOXX
ISS STOXX GmbH, through its group companies, is a leading provider of comprehensive and data-centric research and technology solutions that help capital market participants identify investment opportunities, detect qualitative and quantitative portfolio company risks, and meet evolving regulatory requirements. With roots dating back to 1985, we today deliver world-class benchmark and custom indices across asset classes and geographies and serve as a premier source of independent corporate governance, sustainability, cyber risk, and fund intelligence research, data, and related offerings. Our products and services give clients the scale and leverage they need to grow their business more effectively and efficiently. ISS STOXX, which is majority owned by Deutsche Börse Group, is comprised of more than 3,800 professionals operating across 30 global locations in 20 countries. Its approximately 5,500 clients include many of the world’s leading institutional investors who turn to ISS STOXX for its objective and varied offerings, as well as companies focused on ESG, cyber, and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS STOXX’s expertise to help them make informed decisions to benefit their stakeholders.

Media Contact:
Izabella Nagy
Communications Analyst
press@iss-stoxx.com