Three trends in responsible investing in 2025

Oshni Arachchi, Head of Active Ownership at Danske Bank, lists three trends in asset management that will be dominant in 2025.

1. Shareholders' rights are questioned

In recent years, several markets, especially in USA, has seen a development in which shareholders' rights are gradually being questioned and restricted. This involves new regulations and legislation that make it more difficult for shareholders to influence company decisions in the ways they previously were able to. A clear example of this is the increasing restrictions on shareholders' opportunities to get involved in general meetings or to submit their own proposals. In addition, some US states have introduced laws that make it difficult for shareholders to raise environmental and social issues with company management.

For 2025 This trend is expected to escalate. Companies, especially in North America, may introduce even stricter control mechanisms to avoid external shareholders gaining too much influence. At the same time, we see how some institutional investors and activist funds are trying to navigate these new rules by developing new strategies to maintain their influence and act on a longer-term sustainability agenda. Investors are thus facing a new reality where they must find innovative ways to influence corporate decisions, despite the new restrictions.

2. Increased demands for diversity in the composition of company boards

Diversity on company boards has long been a hot topic, but in 2025 this will intensify further. The EU directive, which will be introduced in June 2026, which requires corporate boards to achieve a certain gender balance, is a clear example of the increasing pressure to improve diversity. The trend will also be about broadening diversity in terms of skills and experiences. Investors will pressure companies to ensure that boards not only reflect a certain demographic distribution, but also have the skills to deal with future challenges, such as the rapid development of AI, biodiversity and cybersecurity.

It is becoming increasingly clear that it is not enough to have a representative composition of boards in terms of gender or ethnicity. Companies must ensure that boards have the right mix of technical, strategic and regulatory knowledge to meet the complex challenges that the future holds. In 2025, investors will become increasingly active in influencing companies to ensure this diversity, as this is not only a matter of fairness but also of the long-term success and competitiveness of companies in a global market.

3. More climate goals scrapped

Climate targets and sustainability are two of the most debated issues in today's business world. In recent years, many companies have set ambitious climate targets to reduce their carbon dioxide emissions, but in 2024 we saw an increase in the number of companies revising or completely abandoning these goals. For some companies, meeting the ambitious targets has proven more difficult than expected, and financial difficulties or changing market conditions have forced them to revise their plans.

In 2025, this will be a trend that receives even greater attention. Investors, who are increasingly pushes for companies will work towards a green transition, will face the challenge of finding companies that are truly committed to making sustainable investments in a long-term and effective way. More companies may backtrack from their original climate targets or present new ones that are lower than previously expected. At the same time, investors will intensify their focus on pushing companies towards more ambitious climate targets, especially given how important these are to achieving global climate goals and to ensuring that companies play an active role in the transition to a sustainable and fair economy.

The increased pressure from investors will mean that many companies will need to adjust their strategies to not only become more transparent about their sustainability efforts but also to meet the demands placed on contributing to the green transition. This will be crucial for companies that want to maintain their reputation and remain competitive in the long term.