Private market focus on environmental, social, and governance (ESG) considerations has continued to climb steadily, and 2024 was no exception. Corporate transparency has taken center stage, even as businesses navigate a changing political climate. Private market innovation is creating new areas of opportunity and risk.
As we look ahead, Novata checked in with our Board of Directors and Sustainability Advisory Board for their views on what to expect in 2025. From political and regulatory developments to AI transformations and a strengthened reliance on data, read their takes on the sustainability trends poised to shape the private markets in 2025:
Rosalind Bazany
Partner, Head of ESG and Impact, Antler
“Resilience will define 2025. Amid global instability and eroding trust in institutions, private markets must lead with solutions that withstand uncertainty and strengthen critical systems. My focus is on ‘rounding error companies’—startups using AI, automation, and data insights to solve inefficiencies once deemed too costly or complex, like water wastage, grid inefficiencies, cybersecurity gaps, and healthcare bottlenecks. These companies may lack moonshot allure but are delivering scalable impact, quietly reshaping industries while driving cost savings and sustainability gains.
Resilience isn’t just innovation—it’s trust. Data will frame this trust, serving as both our greatest asset and test. As AI transforms industries and dominates venture flows, data holds immense potential for progress but also risks of misinformation and disinformation. Transparency will ensure data builds confidence, drives progress, and strengthens systems we rely on.
2025 will be a turning point for VCs to leverage data as a powerful asset. Investors must navigate skepticism and demonstrate sustainability drives value. Context-driven, evidence-based approaches will separate leaders from laggards, proving sustainability is key to profitability and resilience.”
Toby Belsom
Director of Guidance, UNPRI
“Private market investors—with longer holding periods, larger relative positions, ability to allocate primary capital and the possibility of board positions—should have long-term value creation at their core. In that context, sustainability and private markets should be highly complementary and, in my view, it is surprising that we have only recently seen sustainability really get on the agenda for LPs, GPs, and management teams at private equity-owned businesses.
In some ways, the private markets represent the most exciting area of innovation in sustainability and capital markets. The launch of new sustainability private markets funds, the development of innovative ways to collect data on businesses, and new stewardship processes to improve sustainability outcomes in private markets are all likely to accelerate in the coming years.”
Allison Binns
Organizational Behavior and Sustainable Investing Expert
“In 2025, we’ll see a change in presidential administration that, in theory, should not augur well for the level of federal support for sustainability initiatives, which are often seen as politically motivated boondoggles of the Left. However, I see this as a pivotal opportunity for sustainability-minded investors to prove the thesis that sustainable investing is just good investing. (After all, would you trust an investor that wants to invest in unsustainable businesses? No.)
Besides, there is growing consensus in the US that the increasing frequency and intensity of extreme weather events due to climate change poses a real threat to the lives of average Americans, in addition to the country’s economic competitiveness and national security. As such, I think we’ll see a decoupling of the conversation around climate change from the political narratives typically associated with it. In a deregulatory environment without federal incentives, I think smart investment dollars will coalesce around scalable, efficient, market-based energy transition solutions that simultaneously address the economic risks of climate change while generating sustainable economic growth.”
Robert Eccles
Visiting Professor of Management Practice, Saïd Business School, University of Oxford
“There are three trends in particular that I will be following: (1) de-globalization, (2) de-regulation, and (3) de-carbonization. There are many forces at work for de-globalization, from likely tariffs in the next Trump administration to the implications of the EU’s Green Deal. The result will be building up local supply chains, which will create opportunities for existing and new companies in the private markets.
In the US, de-regulation will occur in many ways, and this will lower the legal and compliance burdens on private companies for things such as getting permits for new sites. While the US in the Trump administration and the EU are pursuing very different strategies for de-carbonization, in both cases, although more in the US, this will create opportunities for private companies developing a broad range of technologies for clean energy, such as small modular reactors, and for removing carbon in the atmosphere, such as carbon capture storage and utilization companies.”
Mona Sutphen
Partner, Head of Investment Strategies at Vistria
“DEI will continue to drive innovation and contribute to market relevance. The signal in the noise is clear: companies that embrace diversity, equity and inclusion (DEI) in their workplace and in the design and delivery of their products and services will outperform their peers. While we can expect more arguments about whether we like the three words or choose some others, private markets will sustain their focus on driving DEI maturity in mid-sized companies. Why? Because DEI is good business and private enterprises recognize its transformative potential.
As the US population grows increasingly diverse, companies that understand and serve the identities, preferences, and cultural norms of a changing consumer base will set themselves apart. Within organizations, DEI maturity will remain a key driver of innovation, collaboration, and employee morale and retention. In the face of headwinds, 2025 will see more companies choosing their bottom line through inclusive technology, representative advertising, and equitable workplace policies–DEI isn’t just the right thing to do, it’s a smart, future-focused strategy.”
Peter Dunbar
Principal on the Responsible Investing Team, StepStone
“2025 will be a year in which close attention will need to be paid to politics and regulatory developments. I expect those to bring change and uncertainty for investors in private markets as they prepare and adapt. Whether navigating the lack of guidance for GPs in scope for CSRD, weighing the probability of the ‘Omnibus Law’ that could see the EU Taxonomy, CSRD, and CSDDD consolidated, or preparing for California’s climate disclosure regulations.
At StepStone, we’re also closely monitoring developments in AI governance. The technology offers tremendous societal benefits but also presents significant risks—from those already occurring, such as IP infringement, to broader ethical and safety concerns. As these risks evolve, we’ll play our part by being a thought leader and encouraging private market investors to engage on the topic with portfolio companies, allowing for proactive risk management and collaboration.”
John McArthur
Senior Fellow and Director of the Center for Sustainable Development, the Brookings Institution
“While US and European economic policy debates likely grab outsized attention in 2025, one under-appreciated global economic trend is the emergence of consistent sustainability reporting norms and measurement standards across other key geographies. In November 2024, IOSCO issued a statement of support and encouraged the use of ISSA 5000 as the new global reference point for assurance across its 130 jurisdictions. This builds on the organization’s 2023 endorsement of ISSB’s IFRS F1 and IFRS S2 financial disclosures standards.
Brazil was the first country to adopt the two ISSB standards for public companies, requiring reasonable assurance as of 2026. In 2025, Brazil will host the COP30 global climate summit in Belem, where issues of private finance are likely to be high on the agenda. Meanwhile, G20 countries as diverse as Canada, China, Japan, Mexico, and South Korea are in various stages of exploring related disclosure and reporting standards. Over the coming year, I’ll be watching to see which influential economies take further practical steps toward common global approaches. While many official deliberations prioritize public markets, convergence in reporting and measurement norms increases the odds that private markets reap benefits through alignment, even if on a voluntary basis.”
Lorraine Spradley Wilson
Founder and Managing Partner, Blue Horizon
“We are in a period of escalating geopolitical risks and rapid technological advancements. My focus is on how these changes impact sustainability commitments, emerging technologies, and ways of working.
The incoming US administration plans to ease regulatory constraints. In the US, sustainability initiatives have generally succeeded due to commitments between GPs and LPs. Meanwhile, the European Commission is simplifying sustainability reporting requirements, reducing overlapping requirements. Whether disclosure is mandated or not, climate change represents a significant geopolitical risk, and in 2025 companies will need to determine the right way to quantify this risk in the regions where they operate.
Technological developments across manufacturing, software, and energy are attracting private investment due to their growth potential. This trend will continue, driving digital transformation, efficiency, and competitiveness. As AI becomes more integrated across industries, private markets will play a crucial role in ensuring the responsible use of AI.”
Margot Brandenburg
Senior Program Officer, Ford Foundation
“As a New Yorker, I feel compelled to invoke Yogi Berra: ‘it’s tough to make predictions, especially about the future.’ We are living in an era of intense polarization and conflicting cross-currents, which complicate efforts to predict how the practice of sustainability will unfold over the coming year. With that caveat, here are a few educated guesses:
A high likelihood of deregulation in the US, combined with low levels of institutional trust, will put a higher premium on transparent and verifiable data about the sustainability performance of companies and funds.Given record high levels of economic anxiety and record low levels of trust in institutions, companies that provide quality jobs and positive workplace cultures will attract and retain needed talent. Research shows that when employees feel (and ideally have) a stake in their company’s success, companies realize the greatest ROI on human capital.The enormous and growing physical threats from extreme weather events will continue to drive investor and popular awareness of climate change as a systemic risk. Combined with continued increases to insurance premiums, companies will have both a mandate and economic incentive to invest in resilience.
Read more insights in Novata’s Resource Library.
