The opinions expressed here by Trellis expert contributors are their own, not those of Trellis.​

As an impact investor and educator, I’ve learned to distinguish between the noise that dominates headlines and the signals that actually move capital. As we begin 2026, this discernment has never been more essential.

The jarring political landscape is enough to make you think impact investing is retreating. But here’s what the headlines miss: Markets are moving on their own momentum. Capital hasn’t slowed. It’s just getting smarter about where it flows.

I see 10 trends that will shape impact investing this year. What unites them is a central theme: the transition from aspirational ideals to financial materiality. Impact investing in 2026 isn’t about virtue — it’s about value.

The shift I wrote about last year — from moral imperatives to financial materiality — is in full swing. Asset managers approach climate and biodiversity with a focus on measurable impact to cash flows, valuations and cost of capital. This isn’t a retreat from impact; it’s an evolution. Some studies show that companies reporting clearer sustainability data are being rewarded with lower financing costs and higher equity valuations. The market is speaking and it’s saying, “Show me the numbers.”

AI isn’t just transforming how we invest; it’s transforming how we measure impact. The KPIs that demonstrate how a business addresses environmental or social challenges can be tracked with unprecedented precision. AI-driven geospatial analytics are making physical risk assessments more robust and comparable across markets. For investors, the ability to see a fuller picture of financially material issues has never been greater. The challenge now isn’t gathering data — it’s converting raw material into reliable, actionable insights.

Consider a statistic that should fundamentally alter the investment narrative: During the first nine months of 2024, renewables captured 90 percent of new U.S. generating capacity, with solar alone representing over 70 percent. Mandates aren’t driving this transformation — mathematics is. The cost curves have crossed.

Markets have noticed. Businesses monetizing mature, commercially viable clean technologies have delivered stronger performance than peers betting on nascent innovations. New-energy equities more than doubled the gains of broader indices through the latter half of 2025. Washington’s priorities will rotate, but for solutions that have achieved genuine unit-economic advantage, each production cycle compounds its competitive position independent of whoever occupies the White House.

The key analytical task ahead: separating enterprises that can thrive on pure economics from those whose fortunes remain hostage to legislative tailwinds.

Owners of operating companies and tangible assets can no longer relegate physical climate exposure to the appendix. Surface-level projections can mislead: Aggregate extreme weather damages may increase just 2 percent through mid-century under a 3 degrees Celsius pathway. Yet averages mask the distribution that matters. Morgan Stanley’s analysis suggests the proportion of holdings facing ruinous impairment — losses beyond 20 percent of value — could multiply fivefold.

Underwriters are already adjusting. Natural catastrophe protection premiums are projected to rise around 50 percent through decade’s end. Allocators thinking beyond the current cycle may find that positioning for durability in 2026 represents not merely prudent defense, but a pathway to outperformance.

The globalization trend of the past 25 years is reversing. Smaller, more nimble private companies that maintain emphasis on domestic supply chains are gaining relative advantage over those at the mega end of the market.

Their ability to move quickly, navigate local environments and maintain regional supply chains is becoming a distinct edge against global market shocks, presenting a “picks and shovels” approach for investing in infrastructure. 

The long-anticipated “silver tsunami” — the wave of Baby Boomer business owners reaching retirement age — is cresting, with an estimated 2.9 million privately held businesses expected to change hands over the next decade. 

For investors, the question of who acquires these companies carries profound implications for wealth distribution. While private equity and strategic acquirers remain the default exit paths, Employee Stock Ownership Plans (ESOPs) are emerging as a vehicle for converting retiring owners’ equity into broad-based employee wealth. The mechanics are elegant: Sellers receive favorable tax treatment, employees acquire ownership stakes at no out-of-pocket cost, and communities retain locally rooted businesses that might otherwise be consolidated, stripped or relocated.

Research from the National Center for Employee Ownership shows that ESOP participants accumulate retirement assets three to five times greater than comparable workers at non-ESOP firms — a differential that compounds dramatically for lower-wage and historically marginalized employees who rarely access ownership economics through conventional channels. 

Impact investing is moving from a cottage industry to institutional scale. Governments, including Brazil and Turkey, are expanding impact capital and using it as a key driver of sustainable growth.

Perhaps more significantly, impact wholesalers — vehicles that invest in intermediaries — are increasing the pool of domestic capital. The Japan Network for Public Interest Activities, for example, channels dormant bank assets into social enterprises. Germany is exploring similar legislation. 

Outcome-based financing mechanisms, such as social impact bonds and outcomes funds, have crossed the threshold from experimentation to institutionalization. In Canada, for example, outcome-based transactions have mobilized over $14.5 million since 2023, reaching more than 10,000 beneficiaries.

Pay-for-results is becoming an embedded government procurement strategy. For impact investors, this shift fundamentally changes the risk profile: governments now serve as creditworthy outcome payers while private capital assumes the risk that social programs fail to produce outcomes that trigger payment — a structure that offers both downside protection and scalable deal flow.

Here’s the irony of the current moment: As some policymakers ease back on reporting requirements, investors are using market mechanisms to protect their access to information. 

Despite the retreat in the U.S., the number of companies disclosing decarbonization targets continues to grow. Brazil’s Securities Commission announced that by 2026 all listed companies must publish reports aligned with ISSB standards. The EU’s Omnibus package proposes simplifications to CSRD requirements. The direction is clear: Focus on a narrower set of reported metrics that are financially material. For markets, value lies in the decision-useful, not the exhaustive.

Military escalation and energy security concerns have prompted many asset managers to rescind broad exclusions in defense and energy sectors. At the same time, governments are taking more direct roles in strategically important industries — from critical minerals to AI — sometimes taking equity stakes to secure supply chains and national capabilities.

This industrial policy shift matters for portfolio construction. One analysis shows that state-owned enterprises have underperformed over the past decade and the greater the government’s stake, the worse the underperformance. Yet for bondholders, the calculus flips: Government backing narrows spreads and reduces default risk.

The implication for impact investors is clear: As governments reassert their role in capital formation, knowing where public involvement supports stability and where it erodes profitability will be key to positioning portfolios for the next phase of industrial policy.