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In December 2024, our CIO Jade Huang wrote about the staying power of responsible investing and our commitment to allocating capital according to our Principles for Responsible Investment. As we reflect on 2025 to date, I want to clearly and emphatically restate our commitment to responsible investing.
Across markets and standards, expectations for responsible investing are diverging. While some regions continue to advance regulatory frameworks and transparency, others are deprioritizing or dismissing responsible investment themes. The result is a fractured landscape where responsible investors are required to globally decipher an increasingly complex mix of policies, politics and perspectives.
However, this fractured landscape in no way signals a global retreat from responsible investing, but instead continues to offer investors real opportunity. We fundamentally believe companies that continue to manage financially material risks as part of their long-term business strategy can offer resiliency and lead to long-term value creation for investors, and Calvert remains committed to partnering with our clients to capture this value.
Two key responsible investing themes – energy transition and diversity & inclusion – represent credible opportunities for long-term value creation. There are a few key reasons why these themes remain as relevant today as ever for investors.
Energy Transition – Over the past decade, the Paris Accord and net zero commitments have helped to galvanize energy transition goals, but this shared vision has fractured under the weight of policy shifts prioritizing industrialization, deregulation and defense spending; the Russia-Ukraine war; and the strain of a high-interest rate environment. Nevertheless, a recent report found the number of companies making climate commitments is continuing to grow.1 Further, Morgan Stanley’s Institute for Sustainable Investing found that, with assets totaling $3.92 trillion as of June 30, sustainable funds outperformed traditional funds in the first half of 2025. This outperformance was driven by the sustainable funds’ greater exposure to investment in Europe and elsewhere globally.2
Our “Key Themes for 2025 and Beyond” highlighted how the energy system is being pulled in multiple directions. While spending on renewable energy in 2024 hit a record $2.4 trillion,3 economic growth and electrification continues to rely upon fossil fuels to meet 80% of global energy needs.4 We believe countries and companies will turn to a variety of energy sources to stay apace with increasing energy demands and the need for energy security in a time when traditional energy trading routes are being disrupted. This is expected to include renewables that are often cheaper and quicker to scale.
The current energy landscape demonstrates the need for a bottom-up analysis of companies along the value chain to identify the financially material risks and opportunities to which they are exposed. Many companies have built energy transition strategies and, while they may flex for changing regulatory and market conditions, we believe their long-term direction remains climate conscious.
Diversity & Inclusion – While some companies and institutions appear to be abandoning their diversity & inclusion initiatives, we have also seen others very publicly reaffirming their commitment to diversity & inclusion. Moreover, we have seen leading companies remain committed to diversity & inclusion principles, if only reframed as “belonging” or “people and culture.” These organizations continue to strive to improve representation and inclusive workplaces and we continue to recognize the proven link between strong human capital management and financial performance. Specifically, companies in the top quartile of board-gender diversity are 27% more likely than those in the bottom quartile to outperform financially and companies in the top quartile for ethnically diverse boards are 13% more likely to outperform those in the bottom quartile.5 Calvert’s own 2020 study on board ethnic diversity also found a significant relationship between the degree of corporate board ethnic diversity relative to country demographics and monthly equity performance.6
Calvert has always believed diversity & inclusion matter and are important drivers for a company’s long-term operating performance. We see an inclusive workplace as a benefit and a potential catalyst for innovation and growth. Simply put, we believe a company is stronger and better positioned if its work environment fosters the potential of all its employees – a position that we have held since Calvert’s inception.
What does this mean for investors?
Calvert’s approach remains disciplined and rooted in financial materiality. As fiduciaries, our responsibility is to deliver value by identifying and managing the risks and opportunities most relevant to our clients to help them navigate this complex and sometimes confusing landscape.
Our investment philosophy recognizes companies are influenced by a wide range of factors—from how they manage climate risk and supply chains, to how they support their workforce. These are not just ethical considerations. A 2025 survey from Morgan Stanley’s Institute for Sustainable Investing found that 88% of global companies see sustainability as a value creation opportunity, up by three percentage points from the 2024 survey.7
As more corporations recognize sustainability as an essential driver of value creation, responsible investing stands as a guiding framework and source of potential long-term return. By maintaining our commitment to rigorous analysis and financial materiality, we continue to help our investors harness these opportunities for long-term growth amid an ever-evolving global landscape.
1 PwC’s Second Annual State of Decarbonization Report, March 2025. The research covered over 6,895 companies who submitted the full CDP questionnaire in the 2024 disclosure cycle, focusing on 4,163 public companies within that group. The 2024 reporting window ran from June 4th to October 30th, 2024.
2 Morgan Stanley Institute for Sustainable Investing, September 2025. Past performance is no guarantee of future results.
3 BloombergNEF, 2025.
4 BloombergNEF, 2025.
5 McKinsey & Company Report, “Diversity matters even more: The case for holistic impact,” December 5, 2023.
6 Calvert, Does an Ethnically Diverse Board Mean Better Stock Performance?, September 2021
7 Morgan Stanley Institute for Sustainable Investing, “Companies See Sustainability as a Way to Create Value”, June 2025.
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