Key Themes for 2026 and Beyond: Navigating Climate Change, AI and Affordability in a Fragmented Global Economy

Introduction

As the global economy embraces converging forces—technological innovation, climate disruption and geopolitical fragmentation—we identify several themes shaping the responsible investment landscape. These increasingly interdependent trends sit where we see sustainability factors aligning with financial performance. Though political uncertainty and trade tensions present challenges to global markets, Calvert expects long-term, secular sustainability-linked trends will remain firmly in place.

In 2025, we highlighted energy, data, affordability and circular economy as key themes to watch. For 2026, we evolve these views and introduce climate adaptation, as an additional key theme, and highlight biodiversity as an emerging theme:

1. AI & Energy
2. Climate Adaptation
3. Affordability
4. Circular Economy
5. Emerging Theme: Biodiversity

AI & Energy – Infinite Compute vs. a Finite Grid

Energy supply has now become the primary bottleneck for large-scale data center deployment, overtaking semiconductor availability. We believe 2026 could mark the inflection point where growing power demand from the rise of the digital economy collides with the physical limits of electricity grids worldwide. Morgan Stanley Research forecasts significant growth in data centers and AI deployment, with an estimated $3 trillion in global value chain spending by decade-end. It also forecasts data center power consumption will grow by approximately 23% CAGR in Asia and the U.S. by 2030 and 16% CAGR in Europe by 2030. (see Display 1). This looming AI energy gap has made reliable, affordable and clean electricity a strategic advantage.

Utilities and energy producers face a daunting challenge: meeting huge new electricity demand in an affordable and reliable manner without reversing progress on cutting carbon emissions or raising customer bills. Electricity providers also face major constraints, from limited availability of key equipment and raw material—natural gas turbines are booked through the decade—to the mammoth task of modernizing and expanding aging grid infrastructure. In the short term, solar and other clean energy sources remain the cheapest and quickest to build, but they face political headwinds in some regions and require significant accompanying investment in energy storage and can take time to connect to grids.

Key takeaway: The friction between AI and energy constraints presents an opportunity for a new asset class of “sustainable digital infrastructure”—potentially rewarding firms that deliver efficiency and reliability within constrained grids.

Climate Adaptation – Weathering the Storms

Worsening physical climate events globally translate directly into financial costs (see Display 2) that affect valuations across real estate assets, electric utilities, insurance and other sectors. In real estate, developers and asset owners are integrating climate adaptation measures—from flood-resilient materials to elevated foundations and enhanced water systems—into new builds and retrofits. These measures can also create investment alpha by reducing stranded asset risk and operational expenses while attracting greater leasing demand as climate protected assets can be more appealing to tenants.

The insurance industry is at the forefront of pricing in physical climate risk, and its approach to weather-related incidents is increasingly serving as a broader market signal. As average global temperatures rise and weather systems grow more volatile, governments’ retreat from national disaster measurement programs underscores the growing role of private data and analytics providers in meeting institutional investors’ information needs.

We are also conscious that some climate adaptation measures—such as air conditioning—can exacerbate the carbon cycle. Electricity demand for cooling is increasing emissions and straining grids globally. We see the twin tools of electrification and energy efficiency as crucial for adapting to a changing world without making it warmer.

Traditionally, the climate focus of investors, corporations and policymakers has been squarely on mitigation; Calvert now sees a necessary rebalancing of priorities to include adaptation as on-the-ground climatic conditions worsen. In 2026, global investment in clean energy infrastructure is expected to surpass $2 trillion 1 . In contrast, according to the Climate Policy Initiative, spending on climate adaptation has been less than $100 billion annually in recent years. Ultimately, the less society invests upfront to mitigate further climate change, the more will be required both near and long-term to adapt economies and communities to climate impacts.

Key takeaway: We believe investors should view climate adaptation not purely as a cost but as an enabler of asset value preservation and long-term outperformance, particularly in climate-sensitive sectors. Responsible investors also should bear in mind that climate adaptation is inherently uneven across sectors and geographies, and very localized in nature.

Affordability – Same Issue, New Pressures

Everyday affordability—spanning housing, health care and electricity prices—is reemerging as a macro and social risk factor. In consumer sectors, tariffs on imported raw materials have increased input costs, leading to price pass-throughs for consumers. Value retailers have come to the fore, with discount retailers and circular-economy, peer-to-peer resellers benefiting the most from these shifts. Facing similar dynamics, creditors can support strained consumers by prioritizing flexible payment options, transparent disclosures, savings incentives and alternative data to verify loan eligibility that expands access to credit—measures that may also bolster repayment rates.

In housing, modular and manufactured construction methods are gaining traction as cost-efficient, lower-emission solutions. At the same time, political scrutiny of rent costs is intensifying, compelling real estate firms to balance profit with social license to operate. Health care affordability is also under pressure from regulatory unpredictability, especially when access to health insurance, or certain products and services, is restricted. Additionally, tariff and insurance-related cost increases may bypass manufacturers, insurers and hospitals and land with patients. For example, as hospitals renew supply contracts, tariff-driven increases in the cost of imported medical equipment can raise their expenses. Because hospitals and insurers often can’t fully absorb these hikes, the added costs ultimately show up in patients’ out-of-pocket bills.

Compounding affordability concerns, 2026 could see new AI labor disruptions leaving many without jobs. In contrast to previous workforce cuts, some of the jobs now most vulnerable to AI are highly paid and knowledge-intensive. Two forces are driving this shift. First, AI has already delivered substantial efficiency gains, prompting firms to streamline skilled functions once thought immune to automation. Second, mounting pressure to justify massive AI capital expenditure (capex) is forcing executives to cut operating costs to improve returns on investment. This could lead to a contraction in high-value jobs at firms that inaccurately estimate AI’s productivity gains, exposing them to heightened human capital and reputational risks and ultimately creating more pressure on consumer affordability.

Key takeaway: Affordability persists as a systemic risk and an opportunity—favoring innovators in cost-efficient housing, consumer value chains, circular economy solutions and financial inclusion. While producing positive impacts, AI’s rapid efficiency gains and pressure to realize returns may unsettle parts of the highly skilled labor market and exacerbate cost pressures for individual consumers.

Circular Economy – From Linear Limits to Infinite Loops

We believe the circular economy will be an enduring theme for 2026, as geopolitics—including tariffs and resource nationalism—accelerate a shift in supply chains and increase the value of material efficiency. Companies that minimize waste, reuse products and recover materials—key tenets of a circular economy—can create value, cut costs and reduce risk. These practices also lower emissions and pollution, indirectly benefiting biodiversity.

Policy is moving ahead. Extended producer responsibility (EPR) regulations, such as the EU’s Packaging and Packaging Waste Regulation, mandate redesign toward recyclable and mono-material packaging. These requirements are accelerating investment in recycling infrastructure and sustainable substrates. Meanwhile, the expected EU restriction of over 10,000 PFAS chemicals (per- and polyfluoroalkyls substances) underscores a shift toward product reformulation and green chemistry innovation. We expect these to result in product and packaging reformulations across sectors, but particularly in consumer packaging and chemicals.

In industrials and materials, data center expansion is intersecting with circular economy trends. Low-carbon concrete, recycled metals and closed-loop water-cooling systems are meeting performance and efficiency requirements while supporting sustainability. For packaging and building products, reliance on local, recycled or vertically integrated supply chains can help insulate firms from tariff risk and meet EPR regulations (where relevant).

Resource efficiency also presents an investable opportunity for the global metals and mining sector, where securing key mineral supplies has driven high-level policy discussions. Amid heightened geopolitical risk, volatile trade relationships and elevated metal prices, the case for recycling key materials—including aluminum, copper, rare earth elements and steel, among others—is as strong as it has ever been. The ability to improve supply security, while cutting environmental impacts, represents a dual benefit that is economically additive. We remain vigilant, monitoring supply chain controversies, which hinder execution and competitive positioning. This philosophy is reinforced by Calvert research on the long-term impacts of corporate controversies on valuations across sectors and geographies.

Key takeaway: Circular economy strategies are shifting companies from linear limits to circular advantages. Circular solutions can offer greater resource efficiency and a competitive advantage across consumer, packaging, manufacturing and materials sectors.

Conclusion
As responsible investors, we believe companies that mitigate climate risks, manage natural capital effectively and adopt AI responsibly are more likely to build durable, structural competitive advantages. In the face of widening social and economic inequality, firms that address affordability may also broaden their customer base. Calvert’s research integrates these financially material considerations into our security selection and company engagement to help position investment portfolios for long-term performance in an increasingly complex, multipolar world.