While global politics impact climate action, long-term investment trends favour greener technologies.

Economic factors will ultimately shape environmental, social, and governance (ESG) investment strategies in the medium term, despite political shifts causing temporary headwinds, according to Singapore’s ambassador for climate action, Ravi Menon.

Speaking at a sustainability forum hosted by Temasek on Friday (Feb 21), Menon highlighted that while political resistance to ESG policies has grown—particularly with the re-election of US President Donald Trump—economic trends still favour a greener future.

“The cost of renewable energy has fallen significantly, but newer technologies like low-carbon hydrogen, carbon capture, and sustainable aviation fuel remain expensive,” he noted. However, shifts in consumer demand and evolving price structures indicate a steady move towards sustainability.

Political Challenges and Market Realities
Despite economic momentum, political shifts in major economies pose challenges. The US, historically the world’s largest carbon emitter, is scaling back federal climate commitments, which may influence other nations to lower their targets. Even within the European Union, political support for aggressive climate policies has softened.

Menon, formerly the managing director of the Monetary Authority of Singapore, acknowledged that businesses and governments must navigate these political uncertainties while identifying both risks and opportunities in climate action.

Nature as the Ultimate Enforcer
Beyond political and economic considerations, Menon argued that rising global temperatures will be the most compelling force driving climate policies forward.

“The clearest warning of climate risk is temperature rise,” he said. “At some point, nature will compel the world to take action, even if it has been delayed for too long.”

He warned that an abrupt and disorderly transition—where serious action is only taken once climate impacts become unavoidable—is a likely scenario. Unlike economic cycles or political terms, the climate crisis operates on its own timeline.

“The opportunity for a smooth transition to limit global warming to 1.5°C may have passed, but complete inaction is also unlikely. What we may see instead is a world that is both low-carbon and climate-impaired,” he concluded.