Global assets in open-end funds and ETFs with a climate-related mandate reached a record high of $644 billion in June 2025, up 8.5% from the end of last year.

The new research, from Morningstar’s Investing in Times of Climate Change report, shows that Europe continues to drive growth with 86% of assets, while China and the US saw more moderate gains.

Climate transition funds increased by 16%, reaching a global total of $318 billion with green bond fund assets rising by 14% to $44 billion.  In 1H 2025, passive funds tracking Paris-aligned benchmarks saw $1.7 billion in outflows, while active transition funds attracted almost $2 billion in new investments.

Hortense Bioy, head of sustainable investing research at Morningstar Sustainalytics, said, “Despite multiple headwinds, including the ESG backlash and climate policy reversals, the universe of climate-focused funds continues to expand, both in number and in assets. Investor appetite for climate transition strategies is particularly noteworthy. The sustained growth in this segment, alongside the rise in green bond funds, reflects a growing desire to focus on companies that are better prepared for the low-carbon transition. Meanwhile, investors seem to have missed this year’s strong rally in key transition enablers—renewable energy companies—as strategies focused on these continued to see outflows despite their outperformance.”

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