From Morningstar: 2025-05-06 05:39:00

Global sustainable funds experienced a record $8.6 billion in outflows in Q1 of 2025, a stark contrast to the $18.1 billion in inflows in Q4 of 2024. The US and Europe led the pullback, with the US facing 10 consecutive quarters of withdrawals and Europe seeing its first quarter of outflows since 2018. Asia also experienced negative flows. Despite the outflows, the global ESG fund universe maintained $3.16 trillion in assets by March’s end.

European sustainable funds suffered outflows for the first time since 2018, as geopolitical factors and Trump’s return to power shifted attention away from sustainability goals in Europe. Trump’s anti-ESG policies and legal risks have made US asset managers more cautious in promoting ESG credentials globally, causing hesitation among European investors. Performance concerns in sectors like clean energy further dampened investor appetite for sustainability strategies.

Asset managers in Europe engaged in significant rebranding activities in Q1 ahead of new fund naming requirements in the EU and UK. Around 335 European funds rebranded, with 116 dropping ESG-related terms. The acronym “ESG” was the most removed term, with over 640 European funds rebranding in the past 15 months. New terms like “screened,” “transition,” and “climate” emerged to signal differentiation and ESG considerations.



Read more at Morningstar: Investors Turn Away from ESG Funds in Record…