Why the sustainable economy keeps advancing: our 2026 outlook

Despite political backtracking and rising climate impacts, the shift to a sustainable economy accelerated in 2025, driven by powerful underlying economics.

Clean energy, batteries and digital technologies advanced at an extraordinary pace, with China emerging as the first true ‘electro state’ and the energy transition spreading to unexpected regions worldwide. Artificial intelligence and computing breakthroughs are acting as major catalysts, unlocking efficiency gains, new materials and system level optimisation across the economy. Climate fell out of fashion, yet our Planetary Transition strategy outperformed¹.

Sustainability is therefore moving beyond virtue signalling or compliance toward a structural rewiring of growth, productivity and resilience. In this outlook, we set out the key accelerators shaping the energy, nature and social transitions, identifying key business models set to prosper. 

We have learned from past industrial revolutions

Throughout history, technological revolutions have been propelled by superior economics. Policy often plays a crucial role. However ultimately, new solutions must match or exceed old technologies on quality, accessibility and price².  We identify three structural accelerators that underpin our confidence in the shift to a sustainable economy: 

• Deflationary modular technologies: Technologies such as solar PV and batteries are on course to equalise on quality and radically undercut existing technologies on cost
   
• Productivity multipliers: Innovations like robotics offer environmental co-benefits, including energy and resource efficiency
   
• Intelligence layers: AI and Internet of Things are accelerating the innovations required to realise a sustainable economy – from new material discovery to facilitating regenerative agriculture and, in the social arena, enabling early preventative healthcare.

However, we also recognise that technological transitions and industrial revolutions take time to unfold. Electricity took more than 50 years to reach 50% of US households, for example, and the PC 30 years. Even the mobile phone took 15 years to hit 50%³. 

Mindsets will shift over time as technology makes cleaner alternatives more economically attractive. Our investment framework targets technologies that can outcompete incumbents while delivering environmental and social benefits. 

The next section highlights dynamics across three different transitions: energy, nature and social. 

The net-zero transition has moved from ambition to reality

Discovering ways to harness new forms of energy (e.g., coal in the 18^th century) has historically unlocked waves of economic growth. We are now living through a new electric age with solar offering the potential for the cheapest energy we’ve ever seen.

Solar, wind, storage and electric vehicles are passing mass adoption tipping points. While heavy industry and transport lag for now, we believe rapid battery cost declines are giving the transition unstoppable momentum.

FIG 1. Investment in RE technologies (USD bn p.a.)⁴

• Zero marginal cost of power: Solar panel prices have fallen by around 90% since 2010, pushing large scale solar to record low generation costs. We can start to envision the prospect of a world with near free energy
   
• Energy is de-risked: The shift to modular solar and storage turns energy into a predictable capital asset. It reduces energy volatility as a core business risk
   
• A new macro era: Access to oil shaped 20th century geopolitics; in the 21st century, competitive advantage may hinge on access to cheap solar, wind, geothermal and energy critical materials. 

The world has not yet bent the curve on net biodiversity loss

However, technologies ranging from sensors and robotics to autonomous cars are scaling this decade. They have potential to slash the material footprints of industry and transport and increase circularity in input flows. In food production, modular technologies in fermentation and protein cultivation could unlock huge swathes of land for nature, reversing the deforestation and agricultural expansion that defined the last century.

FIG 2. Agricultural land conversion plateau
Bn hectare of land used for crops & pasture⁵

• Radically efficient production: With automation, the factory of the future will be more efficient, operate at higher utilisation and use less energy
   
• Asset utilisation revolution: If on-demand robotaxis were to replace personal cars, the number of vehicles on the road could fall 80-90%⁶. Autonomous cab trials are expanding outside the US in 2026. We expect partial automation to be default in new car models by 2030
   
• The great land unlock: Animal agriculture is the primary driver of biodiversity loss⁷. However, a new wave of alternative proteins offers the potential to decouple food production from land use, with a fraction of the energy and water inputs. Fermented proteins are on track to outcompete traditional meat in the early 2030s⁸.
   

Read more: Investors focus on system changes at the LOIM Transition Investment Summit

Universal access to basic services is within reach

In the shift to a more socially constructive economy, we note these three key developments: 

• The platform economy: The rise of platform marketplaces since the 2010s has  transformed the consumer landscape, lowering barriers to entry and expanding consumer choice. We see platforms spreading beyond retail to areas including banking and healthcare
   
• A new era of preventive care: GLP-1 therapies are addressing the root causes of cardiovascular risk through sustained weight loss while reshaping consumer behaviour, and wearables now enable continuous monitoring of vital health signals. As AI accelerates drug discovery and diagnostics, preventative care is poised to move from promise to scale
   
• Decentralised finance: The financial system is still feeling the regulatory and economic after-effects of the 2007-2009 financial crisis. However, fintech innovation is opening a new chapter. Private credit is on the rise. Blockchain technology is enabling easier flows of capital into assets across the real economy. 
   

Prosperity without planetary overshoot is now possible. The Sustainability Revolution is disrupting profit pools, unlocking radical productivity gains and improving quality of life. Led by economic fundamentals, the Sustainability Revolution is driving us towards a new economic end state – one that is net zero, nature-positive, socially constructive and digitally enabled. 

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Transition Materials

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