EU ESG Ucits funds are projected to top €11 trillion in assets by 2028, accounting for over 80% of total Ucits assets under management (AuM), according to a a report from PwC Luxembourg.
The report has outlined a compound annual growth rate of 10.2% between 2024 and 2028, showing sustained appetite for sustainable investments across Europe. By the end of 2024, Article 8 and Article 9 ESG Ucits funds had already gained €7.4 trillion, up from €6.2 trillion in 2023.
The EU’s Sustainable Finance Disclosure Regulation (SFDR), a key pillar of the EU’s Green Deal and Sustainable Finance Action Plan, classifies investment funds into three categories: Article 6 (non-ESG), Article 8 (“light green” – promoting ESG characteristics) and Article 9 (“dark green” – targeting measurable sustainability objectives). The regulation aims to redirect capital towards sustainable investments, manage ESG risks and enhance transparency across financial markets.
Active funds continue to dominate passive counterparts in terms of assets under management (AuM), stated the report, underlining investor confidence in active engagement on sustainability issues.
Luxembourg emerged as the leading domicile for EU ESG Ucits funds, both by assets and number of products, reinforcing its long-standing role as a key hub in Europe’s fund ecosystem.
Net inflows into ESG Ucits remained robust in 2024, according to the report. Article 8 mutual funds attracted €238.2 billion, while ETFs pulled in €43.1 billion—pointing to sustained interest from both institutional and retail investors.
Equity strategies remain dominant, with Article 8 equity Ucits holding €2.9 trillion in AuM and Article 9 equivalents reaching €225.9 billion. Bond strategies accounted for €1.8 trillion and €78.6 billion in Article 8 and 9 funds respectively.
On the policy front, SFDR-based exclusions continued to shape ESG fund composition. At end-2024, 45% of Article 8 and 9 Ucits excluded weapons, with many applying further screens on fossil fuels, tobacco and adult entertainment.
Among managers, BlackRock held the top position in Article 8 AuM (€542.9bn), followed by J.P. Morgan (€412.3bn) and Amundi (€345.2bn). In the Article 9 category, Handelsbanken led with €33.4bn, ahead of Pictet (€22.7 billion) and Candriam (€20.4 billion).
Michael Horvath, sustainability and sustainable finance leader at PwC Luxembourg, commented: “Despite a perceived political rollback on sustainability in Europe, demonstrated by the European Commission’s proposed Omnibus package, the sustained growth trajectory of EU ESG UCITS, reaching €7.4 trillion AuM in 2024, is a testament to increasing investor confidence and commitment to sustainable strategies. As a revamp to the SFDR is expected to be published in Q4 2025, we firmly anticipate that this strong momentum will not only continue but accelerate, with ESG UCITS projected to account for 80.8% of total UCITS AuM by 2028. This is more than a market trend: it signals the enduring shift in how capital is allocated across the EU, with ESG considerations now embedded in mainstream investment decisions.”
Geoffroy Marcassoli, Emea AWM ESG leader at PwC Luxembourg, added: “At a time when scepticism towards ESG is running high, the findings of our report show that in the European asset management industry, funds that align with Articles 8 and 9 of the SFDR are holding ground, continuing to attract capital flows. As scrutiny over sustainability credentials grows, aptly demonstrated by the growing number of pension funds terminating their mandates with US-based managers who have backtracked on ESG, sustainability assurance comes to mind as an effective tool that asset managers can use to demonstrate the viability and accuracy of their claims.”
