Buzz: Transfer to editor

EOS at Federated Hermes Limited publishes 2025 Annual Review, with full engagement and voting highlights.

In 2026, investor stewardship will need to increasingly focus on systemic economic risks and opportunities alongside the financial performance of individual investments. Universal owners are widely invested in the economy, with long-term investment horizons, so absolute returns matter. Indeed, it’s arguable that the performance of the benchmark can be of greater value than relative returns.

With this in mind, we believe that stewardship needs to extend beyond engagement with companies to include policy and market best practice engagement, to help address systemic risks. When carried out effectively, this will provide the policy and industry environment in which companies can grasp the opportunities that new market trends afford. This will help to preserve long-term value for our clients, and their beneficiaries.

The explosive growth of artificial intelligence (AI) has presented investors with both extraordinary opportunity and material risk since it burst onto the mainstream in the early 2020s.

It has streamlined workflows, automated tasks and, in many cases, posed a direct threat to entire industries and workforces. But, for those looking to actively participate in the AI revolution while still protecting portfolios from its power of “creative destruction,” we believe there is one sector that sits in a genuinely unique position: health care – and biotech in particular.

Unlike other industries facing displacement, biotech is being amplified by AI, not replaced by it. In our view, AI‑driven innovation, the sector’s defensive characteristics, and rate‑sensitive upside places biotech at the center of a compelling opportunity that lets investors play both offense and defense.

At a glance:

• Over $34 billion of private capital flowed into robotics-related companies in 2025 – more than twice that of 2024.¹ Yet some of the best-funded companies are still in the early stages of commercialisation, with scaled deployments years away.
• Physical world foundation models, which include both vision language action and world models, are emerging as the next frontier of artificial intelligence, but data remains a critical bottleneck.
• We see investment opportunities in robotic hardware and the software ‘picks and shovels’ of physical AI, including companies providing data, testing infrastructure and simulation tools.

In this report we outline the ways in which, in the most recent calendar year, we have implemented the principles of the UK Stewardship Code as signatories.

A New Paradigm

In many respects, ESG does not appear to be shrinking at all. Instead, it may be evolving from a thematic investment trend into something much more deeply embedded within mainstream finance and corporate operations.

For anyone following headlines around ESG over the past two years, the narrative can sometimes feel contradictory. Political backlash in parts of the US, fund outflows from some labelled ESG products, and a visible retreat from explicit “ESG” branding have all contributed to a perception that the sustainability market may be slowing down. Yet for many professionals working in and around the sector, the lived experience feels very different. The volume of reports, commentary, data products, conferences, hiring activity and specialist services continues to grow at an extraordinary pace.

The ESG Ecosystem Is Expanding

One of the clearest signs of this is the sheer expansion of the surrounding ecosystem. Five years ago, the market for sustainability-related services was relatively narrow. Today there are hundreds of firms focused on climate analytics, carbon accounting, biodiversity data, supply-chain monitoring, transition finance, ESG software, reporting automation and regulatory compliance. Artificial intelligence is accelerating this trend further, with a growing number of providers offering AI-enabled CSRD mapping, sustainability data extraction, disclosure drafting and ESG research tools.

At the same time, sustainability responsibilities are increasingly being integrated into core business functions rather than sitting inside standalone ESG teams. Climate and sustainability reporting now routinely appear inside annual reports and financial filings. Banks are embedding transition finance specialists inside investment banking and corporate lending teams. Asset managers are integrating stewardship, climate risk and sustainability analysis into broader investment processes. In many organisations, ESG has become less of a separate initiative and more of an operating framework.

Reporting and Content Volumes Continue to Grow

The explosion in content and reporting also suggests a market that is still expanding structurally. Asset managers, banks, consultants, accounting firms, law firms and data providers now publish a constant stream of sustainability commentary, stewardship reports, climate transition papers, biodiversity research and regulatory analysis. What once felt like a specialist niche increasingly resembles part of the normal information infrastructure of global finance.

Importantly, much of this activity is now being driven by regulation and operational requirements rather than purely by marketing demand. Frameworks such as CSRD, ISSB, SFDR and TNFD have created large-scale reporting and compliance obligations that require companies to build systems, hire specialists and invest in data capabilities. Even firms that have become more cautious around the term “ESG” are often increasing investment in climate risk, sustainability reporting and transition planning behind the scenes.

ESG May Be Maturing Rather Than Retreating

The language itself is also changing. Rather than talking exclusively about ESG, firms now refer to transition finance, resilience, climate strategy, sustainable infrastructure, stewardship, human capital or corporate sustainability. In some cases, the terminology has softened while the underlying activity has become more sophisticated and institutionalised.

This may explain why there can appear to be a disconnect between media narratives and day-to-day market reality. The highly visible “ESG boom” phase of the early 2020s may have peaked, but what has followed looks less like collapse and more like industrialisation. Sustainability has moved deeper into the plumbing of finance, regulation and corporate reporting.

For professionals who spend their days reading sustainability research, fund commentary and corporate reporting, the sense that ESG remains highly active is therefore not imagined. If anything, the market today appears broader, more operationally embedded and more information-rich than at any point in its history.

Key Takeaways

• ESG activity appears to be evolving rather than disappearing.
• The sustainability ecosystem now includes far more data, software and AI-enabled providers.
• ESG responsibilities are increasingly embedded into mainstream finance and operations.
• Sustainability reporting and commentary volumes continue to grow rapidly.
• Regulation has created durable long-term demand for ESG infrastructure and services.
• The terminology may be changing, but the underlying market activity remains substantial.

Recent ESG / Sustainable Finance Leadership Moves (2026)

• Sindhu Krishna appointed UK Head of Sustainability, Investment Consulting at Aon (March 2026). Krishna previously held senior sustainable investing roles at Cardano and is known for work on climate-aware investment strategy and stewardship.
• Holly Turner promoted to Head of Sustainable Investments at Schroders Capital (February 2026). Turner now oversees sustainability integration across Schroders Capital’s private markets businesses including infrastructure, real estate and private debt.
• Maud Pierre-Minuit appointed Head of Sustainable Transitions at Ostrum Asset Management (April 2026). The role focuses on transition investing strategy and ESG integration across investment activities.
• Chaoni Huang appointed Head of Sustainable Finance & Transition, Asia at HSBC (January 2026). Huang joined from BNP Paribas and leads transition finance and decarbonisation advisory work across the region.
• Denise Odaro appointed to lead sustainable finance transition activities for Europe and the Americas at HSBC (March 2026). The role supports corporate and institutional clients on transition and climate financing initiatives.
• Lauren Smart appointed Global Head of Sustainable Finance at Bloomberg (February 2026). Smart previously led Sustainable1 at S&P Global and is well known in climate analytics and ESG data.
• Kelvin Wong appointed Chief Sustainability Officer at DBS Bank (April 2026). Wong oversees DBS’s sustainability and transition agenda including sustainable finance and operational climate targets.
• Esra Turk appointed Global Head of Sustainable Finance within Deutsche Bank’s Investment Bank (2026). The role sits within investment banking coverage and focuses on sustainable finance origination and client solutions.

The sustainability sector stands at a crossroads. While climate urgency intensifies and regulatory frameworks expand globally, the employment landscape for environmental management professionals has undergone significant recalibration. Understanding these dynamics and positioning yourself strategically has never been more critical for those pursuing or advancing in sustainability careers.

Sustainability statement from p50

… includes: …

• Environmental information
  • Climate change
• Social information
  • Own workforce
  • Consumers and end-users
• Governance information
  • Business conduct

Sustainability statement from p.64

... includes ...

• Environmental information [p. 98]
• Social conditions [p. 152]
• Governance information [p. 174]

In our Annual Report, you can find our statutory sustainability statement, which provides information on our sustainability performance. In addition, you can find detailed and segmented data in our Sustainability Fact Book and in our annual Climate Progress Report you can see latest information on climate targets and results. 

Published Corporate Governance & Engagement Report 2025 in May 2026 plus Climate & Nature Report 2025

Q1 2026 Sustainable Investment Review published Apr 2026 with active ownership/stewardship themes

Published 2025 annual reporting in Feb 2026 incl. sustainability progress and financed emissions updates.

… includes …

"Our strategic vision for 2030 is to be the preferred financial partner in the Nordic transition to net zero."

Priority themes:

• Climate & energy
• Nature
• Financial well-being
• Inclusive & safe societies

AP3 here

AP2 here (AR, stewardship from p24)