Sustainability Outlook 2025: Progress, Trends and an 2026 Forecast

A decade after the Paris Agreement, sustainability took center stage in 2025, marked by ambitious climate pledges, a surge in clean technology investment, and evolving regulations. While challenges remain, the trajectory is clear: the global economy is bending toward a greener future.

At the landmark COP30 summit in Belém, Brazil – the 10th anniversary of Paris – over 122 countries submitted enhanced climate plans, putting the world on a lower emissions path than was expected a few years ago. By one estimate, these new pledges would reduce global emissions to 12% below 2019 levels by 2035, whereas without the Paris Agreement, emissions were projected to rise by up to 48% in that period.

In other words, the Paris Agreement is working, bending the emissions curve, but the world is still not where it needs to be to meet climate goals. Nonetheless, 2025 offered reasons for optimism: major economies and businesses accelerated their sustainability efforts, and 2026 promises to build on this momentum with a focus on implementation and innovation.

Europe: Balancing Ambition and Competitiveness 

The European Union solidified its role as a sustainability leader in 2025 with new climate commitments and policy initiatives, while also recalibrating its approach to safeguard economic competitiveness. Ahead of COP30, the EU announced an updated climate target – cutting greenhouse gas emissions 66.5–72.5% by 2035 (from 1990 levels) – aligned with a newly adopted goal of 90% net emission reduction by 2040, on the road to climate neutrality by 2050.

This raised ambition underscores Europe’s determination to lead on climate action. Indeed, over the past decade, the EU has more than halved its coal use and sharply reduced reliance on fossil gas, while massively expanding renewables. By 2024, clean sources generated 47% of EU electricity – nearly half of all power – demonstrating that a managed phase-out of fossil fuels is achievable while also enhancing energy security and industrial opportunities. Europe’s Green Deal policies (including the Fit for 55 package and REPowerEU) are driving this transition, aiming to double the pace of renewable deployment to hit a 42.5% renewables share in final energy by 2030.

At the same time, European leaders have stressed that sustainability measures must go hand-in-hand with economic growth. The European Commission under Ursula von der Leyen has emphasized competitiveness as a driving force for 2025–2029, ensuring the Green Deal’s climate initiatives also bolster innovation, jobs, and prosperity.

This strategic shift means evaluating how green policies can support rather than hinder industrial competitiveness – a response to global pressures and energy shocks in recent years. In practice, it spurred a “Clean Industrial Deal” in 2025 focused on scaling clean technologies and cutting red tape for green projects. For example, the EU is streamlining permits for renewables; slow permitting was cited by 83% of companies as a major obstacle to investment, and China attracted 81% of global clean energy investments in 2024, highlighting Europe’s need to act.

Crucially, the EU remains committed to its Green Deal objectives even amid political shifts. A 2024 review by the EU’s climate advisory board warned that much greater effort is needed across all sectors to meet the 2030 emissions target, raising urgency for effective implementation. The EU’s answer is to double down on execution: providing support for industries to comply with new rules, mobilizing green investment funds, and insisting that sustainability is a catalyst for a more resilient, future-proof economy, not a burden. Notably, the EU and its member states continued to be the world’s largest climate finance donor in 2024, providing €31.7 billion to developing countries (about half of it for climate adaptation), reflecting Europe’s effort to lead by example internationally.

Global Developments in 2025: From COP30 to Clean Energy Trends 

On the global stage, 2025 was a pivotal year of climate diplomacy and clean technology progress. COP30 in Brazil became a forum for nations to move from promises to implementation, even as outcomes were mixed. A positive development was the wave of enhanced Nationally Determined Contributions (NDCs) submitted before and during the summit – over 120 countries updated their climate pledges, pushing projected emissions in 2035 significantly lower than previous trajectories. This momentum showed that multilateral climate action, spurred by the Paris Agreement, is accelerating. “The world moved in the right direction… but make no mistake: the EU had hoped for more,” said EU Climate Commissioner Wopke Hoekstra, reflecting cautious optimism about COP30’s outcome.

Key emitters like the EU, Japan, Brazil, and others raised their targets, but some major players (notably the United States, due to political shifts) did not fully engage, tempering the conference’s ambition. Still, COP30 delivered agreements to triple global adaptation finance by 2035 under a new climate finance goal, addressing the urgent needs of vulnerable nations coping with floods, drought,s and heat.

For the first time, countries adopted a framework of adaptation indicators to track real-world resilience progress. And on the social front, the summit established a Just Transition Mechanism – a plan to support workers and communities in the shift to clean energy, ensuring no one is left behind. Issues of climate justice, indigenous rights, and gender equality were elevated, resulting in a new Gender Action Plan to empower women in climate action.

A contentious topic was the phase-out of fossil fuels. More than 80 nations (including the EU) formed a coalition pledging to transition away from unabated fossil fuels, echoing calls to cap oil, gas, and coal use in line with the 1.5°C goal. However, a binding global agreement to phase out fossil fuels remained elusive, as some big emitters resisted explicit language.

Instead, the conference reinforced the pledges from COP28: to triple renewable energy capacity and double energy efficiency by 2030. Here, the trend is encouraging – renewable deployment is surging worldwide. In 2025, clean energy investment and installation hit record highs. The International Energy Agency (IEA) projects that global fossil fuel demand will peak before 2030, thanks tothe  rapid growth of wind and solar power and strong climate policies. Wind generation is on track to more than double, and solar capacity to quadruple by 2035, under current commitments.

In fact, many analysts now say coal use has likely already peaked, oil demand should crest around 2030, and natural gas by the mid-2030s. This “peak fossil fuels” scenario gained credibility in 2025 as renewable energy met the bulk of new electricity demand globally. Even with energy price volatility in the past years, countries doubled down on clean energy to reduce dependence on expensive fossil imports. Dave Jones of energy think tank Ember noted that nations rattled by the recent energy crisis see renewables and electrification dominating the future, bringing both climate and economic benefits.

These efforts recognize that sustainability extends beyond carbon: preserving ecosystems and natural capital became a mainstream part of the agenda.

Looking Ahead: An Optimistic Outlook for 2026 

Heading into 2026, the stage is set for sustainability to advance from goal-setting to tangible action. The focus will be on implementation: translating 2025’s new climate pledges, laws, and investments into real-world outcomes. In the European Union, that means delivering on interim targets – further raising renewable energy’s share (on the way to 42.5% by 2030, deploying the funds and regulatory tweaks of the Clean Industrial Deal, and holding course on emissions cuts even amid political debates. Globally, 2026 will test whether the world can accelerate emissions reductions to keep the Paris Agreement’s 1.5°C goal within reach.

Key upcoming milestones include the next UN climate summit (COP31), where pressure will mount on laggards to strengthen fossil phase-out commitments and on wealthy nations to fulfill climate finance promises. We can also expect progress on the promised $1.3 trillion per year climate finance framework (public and private), taking shape to support developing countries, with emphasis on adaptation funding.

None of this is to say the transition will be easy. The world in 2026 still faces significant climate risks (2025 again brought extreme weather events across continents), and the gap to limiting warming to 1.5°C is still daunting. Geopolitical and economic uncertainties could yet slow progress – for instance, if a major economy deprioritizes climate action or if a financial downturn tightens funding for green projects. Yet, the overall outlook remains guardedly optimistic. The past year showed that despite obstacles, the momentum for sustainability is resilient. Multilateral efforts, even without unanimous support, did inch forward on critical issues. Clean technology proved its economic viability, and public opinion largely favors a greener future. Importantly, businesses and investors are increasingly internalizing sustainability as a long-term imperative, not a fleeting trend.

As we move into 2026, the world has homework to do – implementing policies, innovating faster, and ensuring a just transition – but also a sense of hope that a safer, fairer, more sustainable global economy is within reach.

In the words of a European climate official: this is “not about saving the planet” as an abstract idea, it’s about confronting the harsh realities of climate impacts and harnessing our collective ingenuity to overcome them. The task is enormous, but 2025 has shown that we have the tools, the knowledge, and increasing willpower to get it done. If we keep up the pace, 2026 could mark a significant leap toward a truly sustainable future, one that is not only environmentally sound but also economically inclusive and resilient.

Written by João Maria Botelho.
Have you read?
Why Your Personal Brand Is a Promise, Not a Performance.
What São Paulo, Ho Chi Minh City, and Cairo Reveal About the Rise of Global Megacities.
The Succession Blind Spot: How Founder Dependence Hurts Valuation and M&A Deal Speed.
Strategy and Sports: Using Athletic Metaphors to Drive Strategic Business Growth.
Skip Resolutions and Audit Your Values: A Smarter Approach to Personal Growth.