Generation: How Green Trends are Impacting Manufacturing
A new report from sustainable investment management firm Generation unpacks a muddled picture for sustainability.
The 2025 Sustainability Trends Report highlights a world where the rapid scaling of climate technology often appears at odds with the political headwinds emerging from major world powers.
For manufacturers, the report outlines a period of risk and opportunity. The data points towards a clear direction in the power and transport sectors as clean technologies are scaled quickly and capital follows suit.
Yet global climate politics have entered what the report describes as a “period of retrenchment,” largely influenced by the US. This divergence between technological momentum and political intent is creating a complex environment for businesses to navigate.
US policy reversals and clean tech investment
The report frames 2025 as a stress test of whether global climate action can withstand the disengagement of the US.
According to Generation, the re-elected Trump administration has not only withdrawn from the Paris Agreement but has also moved to strip the federal government of its authority to regulate greenhouse gases.
This action could impair future climate initiatives in the country.
These policy reversals have had a tangible impact on industrial investment. Generation estimates that they have “already triggered cancellations of nearly US$30bn of prospective clean-industry investment in the US,” with further modelling suggesting this figure could reach US$500bn over a decade. This creates a power vacuum that other nations are keen to fill.
The report argues that China is quickly assuming the mantle as the world’s leading force in sustainability, fuelled by its aggressive industrial policy and growing exports of renewable energy technology and electric vehicles (EVs).
Electric vehicle market and manufacturing dynamics
In road transport, Generation sides firmly with the view that electrification is the global North Star.
The report cites International Energy Agency data suggesting electric cars are expected to account for 25% of global auto sales this year.
The contrast between markets is stark. EVs already represent close to 60% of new car sales in China and around a quarter across Europe. The US market is lagging with EVs making up only about 10% of car sales in 2024.
This gap presents challenges and opportunities for automotive manufacturers. Tesla’s once-dominant position began to erode this year, particularly in Europe, where Tesla has suffered double-digit sales declines.
This trend is compounded by the fact that “Chinese brands now offer very affordable models.”
While the passenger vehicle market transforms, decarbonisation in heavy-duty transport is stirring from a small base. The report stresses that infrastructure for high-power charging for eHGVs remains at a “barely-started” stage in most countries.
Industrial decarbonisation and hydrogen hurdles
For years, hydrogen has been presented as a key solution for decarbonising heavy industry. However, Generation believes that, in 2025, the green hydrogen bubble will truly burst.
A substantial share of European projects have been cancelled, with many more shelved as the cost gap between green hydrogen and grey hydrogen produced with fossil fuels remains wide.
The report's authors are blunt in their assessment. They write that the enthusiasm for hydrogen “may have cost us years in which industrial decarbonisation could have been pursued by more practical means” and note that the initial hype was strongly promoted by oil majors.
While hydrogen stumbles, other clean energy sectors are attracting around twice as much investment globally as fossil fuels.
The core message for corporate and financial audiences is that the economics of the transition are pulling one way while politics pushes another. Companies that treat this turbulence as a reason to pause their decarbonisation efforts risk being on the wrong side of what the report calls “the race for the future”.
