UBS Group AG believes that sustainable investing, despite recent headwinds, is poised for a resurgence as new generations of wealthy clients push their portfolios toward climate-conscious strategies. Speaking at the Milken Institute Asia Summit in Singapore, Adrian Zuercher, Co-Head of Global Asset Allocation and Co-Head of Global Investment Management for Asia-Pacific at UBS, said demand is shifting noticeably among younger and female investors who are increasingly prioritizing environmental and social outcomes alongside financial returns.

Shifting Investor Demographics

According to Zuercher, the appetite for sustainable portfolios is being driven by intergenerational wealth transfers and a changing investor profile. While he acknowledged that ESG strategies may not appear to be the most appealing theme in the current market environment, he emphasized that the intentions and requests UBS is seeing from newer clients point clearly toward sustainability. This demographic shift could play a decisive role in steering the industry back toward climate-aligned investing, even as the broader ESG label faces skepticism and political backlash.

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ESG Under Pressure

In recent years, ESG has been caught in a political and financial storm. High interest rates and energy shocks stemming from the war in Ukraine weighed heavily on renewables and other sustainability-linked investments. In the United States, the strategy has been criticized as a “woke” intrusion into markets, leading several states to ban ESG-oriented policies and funds. Under the current Trump administration, the attacks have deepened through legal, regulatory, and ideological measures that directly challenge ESG as an investment approach. Europe, traditionally a stronghold for sustainable finance, has also begun to recalibrate. Pressure from Germany and France has resulted in a scaling back of corporate sustainability directives covering reporting and due diligence. At the same time, stricter rules governing fund labels have prompted asset managers to strip ESG from product names, even when underlying strategies remain unchanged.

Renewables Signal Enduring Demand

Despite the headwinds, investment in climate solutions remains strong. BloombergNEF reported that renewable energy projects attracted a record $386 billion in the first half of 2025, an increase of 10 percent compared with the same period a year earlier. Zuercher argued that this demonstrates resilience in the underlying themes, even if the ESG label itself has become more contentious. He suggested that stewardship and responsible investing will likely return to the forefront once current market and political pressures ease.

Wealth Transfer and Private Markets

Zuercher also highlighted another trend shaping the future of client portfolios: a growing tilt toward private markets. As wealth transfers accelerate, the next generation of clients are looking for broader diversification and more return drivers than traditional public investments provide. This shift may further fuel demand for sustainability-focused private market opportunities in areas such as green infrastructure, impact investing, and climate technology.

UBS Strategy and Sustainability Commitments

UBS has itself faced scrutiny over its climate strategy. In August, the bank withdrew from the Net-Zero Banking Alliance, joining several global peers in stepping back from the world’s largest industry coalition for climate commitments. It also extended its operational net-zero target to 2035, ten years later than originally planned, citing integration challenges following its acquisition of Credit Suisse and updated regulatory guidance. Nevertheless, UBS has continued to expand its sustainable investment footprint, increasing its sustainable assets under management to $296 billion in 2024, up 5 percent year on year. The bank sees this growth as a foundation to capture the next wave of client demand, even as ESG as a label undergoes redefinition.

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Looking Ahead

For UBS, the message is clear: the future of sustainable finance will not be dictated solely by short-term political sentiment or shifting regulatory frameworks, but by the priorities of the clients who hold the wealth. As new investors enter the market with stronger sustainability preferences, ESG may yet move from a contested theme back to a central pillar of investment strategy.

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