Global sustainable fund inflows rebounded in Q2 2025, with $4.9 billion entering the universe after record redemptions in Q1. European investors led the recovery, pouring $8.6 billion into ESG funds. European sustainable strategies mirrored broader market performance. Clean energy stocks outperformed traditional energy sectors.

US sustainable funds saw a smaller outflow of $5.7 billion in Q2, marking the 11th consecutive quarter of losses. The anti-ESG backlash in the US, intensified under the Trump administration, has led to cautious sustainability promotion by asset managers. Global sustainable fund assets reached $3.5 trillion, a 10% increase from the previous quarter.

Europe holds 85% of global sustainable fund assets, while the US accounts for 10%. Funds in Europe underwent a record number of name changes in Q2 to comply with ESMA guidelines. Over 1,300 European funds have been renamed over the past 18 months, with many adopting alternative terms signaling continued ESG consideration.

Despite geopolitical challenges, European sustainable funds thrived in Q2. With global assets rising, Europe remains a leader in sustainable investing. US funds continue to see outflows due to anti-ESG sentiment. Name changes in European funds reflect a shift towards alternative terms while maintaining ESG focus.

Read more at Morningstar: Global ESG Fund Flows Rebound in Q2 2025 Despite ESG Backlash and Geopolitical Uncertainty