Sustainable finance stocks showed mixed signals today, with ESG-focused ETFs like iShares MSCI USA ESG Select rising 0.8%, outperforming the S&P 500’s flat close. Analysts project renewable energy equities could gain 10%-12% by Q4, driven by green bond issuance hitting a record $550B in While “essential” functions to maintain public safety, fulfill specific legal obligations or protect property will continue in the shutdown, all other activities funded through annual appropriations will be paused. Issuers in the US face heightened challenges as the policy support for sustainability rapidly diminishes. The One Big Beautiful Bill Act significantly cut the tax incentives and funding for many clean energy technologies. Climate regulations are being rolled back. The Securities and Exchange Commission (SEC) has abandoned efforts to mandate climate reporting, and federal action regarding diversity, equity and inclusion (DEI) have complicated ESG communications. Collectively, these developments have led to unprecedented caution among issuers. As a result, the sustainable finance volume from corporates and financials retreated to US$58bn in the first seven months of 2025, the lowest since 2020. Moreover, refinancings take up a good part of the issued volume. For instance, Deere & Co’s sustainability-linked loan transactions of US$11.5bn, the largest among all issuers in the US in 2025, were to refinance two revolving credit facilities. This means that capital is not being deployed toward new sustainability commitments. There is also anecdotal evidence that some issuers have lowered or abandoned ESG targets in previously issued ESG-linked debt. Issuance from the rest of the Americas has also substantially dropped year-on-year, likely due to the repercussion effects from the US. In contrast, there has been a year-on-year jump in issuance from supranationals domiciled in the US to fund their ESG commitments globally. In sustainable finance bonds, yields narrowed to 3.15% on climate-linked debt instruments. Investors are rotating capital into longer maturity ESG bonds, expecting stable returns amid central bank rate pauses.