Many of the challenges are not new. Although the outlook for 2024 looked quite gloomy, it turned out to be a surprisingly good investment year, with growth and inflation both exceeding expectations. De Vries didn’t share this initial gloom, but did stress that uncertainties remained high. “Although 2024 saw better-than-expected growth, in Europe it remained below the historical average, and there were large regional differences.”
A world full of potential game-changers
The global economy will be at a critical crossroads in 2025, with structural trends preventing a return to the pre-pandemic growth path. According to De Vries, tipping points such as ecosystems on the brink, extreme weather events, technological innovation, geopolitical tensions and the ever-growing mountain of debt could cause a sudden landslide.
Investment Outlook 2025
The world is rapidly approaching several critical tipping points—both environmental and economic—that could reshape the global landscape. Our Investment Outlooks for 2025 explore the structural challenges and game-changers that could become turning points for both the global economy and investors.
Read our in-depth reports and background articles.
For investors, the challenge lies in navigating these complex and often contradictory changes. De Vries stresses that the companies that are preparing for major, structural changes are in the best position. “Looking beyond economic cycles and identifying the fundamental changes that are shaping the world instead; that’s what impact investing is all about. This means understanding the longer-term goals, knowing what solutions are needed and pinpointing the companies that are actively delivering positive change.”
De Vries recommends a resilient, more defensive investment strategy for the year ahead. “With this year's high stock market profits and the weaker growth outlook for 2025, a stock market correction may be on the cards. Impact remains our most important compass. We focus on sectors and companies that contribute structurally to the transition to a sustainable economy. Think of companies like Advanced Drainage Systems, an American producer of drainage pipes from recycled plastic. Or Japanese Kyoritsu Maintenance, which provides decent and affordable housing to 40,000 students and young professionals. These are likely to be the future winners and provide the most stable investments.”
Impact is increasingly measurable
An important development is that Triodos IM is increasingly able to measure impact. “This is really important because it means we can substantiate an impact story more clearly, not only qualitatively but now quantitatively too,” explains De Vries. This provides greater insights as well as direct implications for the composition of the portfolios.
De Vries: “We can have a better view of where impact comes from and focus on finding impactful companies. This leads to other, better choices. Certain companies may drop out of our portfolios, while others can end up having a much greater impact than what we originally anticipated. This presents opportunities to add new names to the portfolio that not only meet impact goals but also perform strongly financially.”
Recycling and water: opportunities in 2025
An emerging theme for 2025 is the circular economy. “Trade barriers will make recycling relatively more attractive, increasing the focus on the circular economy. Companies that make timely investments in this area are likely to be winners in the coming years,” says De Vries.
In addition to recycling, De Vries points to water management as an important opportunity. “Water management – including handling heavy rainfall and ensuring clean drinking water – is one of the pressing challenges of the years to come. Companies that provide access to clean drinking water, such as Brazilian SABESP, are likely to attract many investors.”
Trump: short-term noise
The ‘American stocks and shares party’ surrounding Trump's election was short-lived, says De Vries. “You saw a slight sense of excitement in some areas, but the mounting uncertainties are now affecting investment and consumer spending.”
De Vries doesn’t think that Trump will have a lasting impact on the sustainable transition. “It's short-term noise. Although his policies could cause delays, sustainability is deeply rooted in the economic system. Companies and governments will continue to invest in renewable energy, if only because of the increasing climate risks.”
“Trump is expected to cut climate budgets which led to a sell-off in renewable energy,” confirms De Vries. “But that pain has now been dealt with. The renewable energy industry will continue to grow even without subsidies. This could make the sector one of the positive surprises of 2025.”
Positive game changer
This brings De Vries to a positive game-changer for the sustainable transition: in recent years, the price of renewable energy has fallen to a level where it can directly compete with fossil fuels. “The argument today for using gas or nuclear power plants is security of supply. No one talks about the price anymore.”
The challenge now is to invest in infrastructure, such as networks and battery solutions, to use this energy more efficiently. De Vries: “The problem isn’t the price or the installation costs of renewable energy, but the energy grid that cannot always handle all the sustainably generated energy. How can we store this energy in a smart way? That’s what’s being invested in now. There are wonderful opportunities here for impact investors in 2025."