Global inflows into ESG funds in Q4 of 2024 reached $16 billion, up from $9.2 billion in Q3.
Morningstar Sustainalytics’ Global Sustainable Fund Flows report for Q4 2024 also shows that:
• In the US, redemptions from sustainable funds in the last quarter slid further to USD 4.3 billion compared with the USD 2.0 billion outflow registered in the third quarter.
• Global sustainable fund assets retreated by 4% over the quarter to almost USD 3.2 trillion, dragged mostly by market price depreciation.
• Product development rebounded, with 86 new sustainable funds in the fourth quarter, compared with the 60 funds launched during the previous quarter.
• In Europe, 94 sustainable funds closed or merged in the fourth quarter, bringing the total to 351 over the full year. Meanwhile, 213 products changed names in 2024, 50 of which dropped key ESG terms. In the US, a total of 19 sustainable funds were liquidated, outpacing new launches for the sixth consecutive quarter.
• In the UK, 61 funds have adopted a sustainability label so far, representing USD 35 billion of assets.
Hortense Bioy, Head of Sustainable Investing Research at Morningstar, said, “Global sustainable funds ended 2024 on a high note, achieving their strongest quarterly inflows of the year. Europe, again, was the driving force. This fresh flow of capital, however, shouldn’t hide another reality. Over the full year 2024, global ESG funds recorded their lowest inflows since 2018, while the rest of the market enjoyed a boom. 2025 might be a reset year, with anti-greenwashing rules reshaping the ESG fund market, companies re-affirming or rolling back their sustainability initiatives, and governments reviewing their priorities amid a changing geopolitical and economic landscape. These are new developments that sustainability-focused investors will have to navigate.”
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