US-based asset managers are crossing the Atlantic in search of growth, – a trend that’s seeing global convergence in European markets.
But at the same time, Carne’s Supermodel II research* reveals they’re ditching sustainable investing. After COP30 – and with Europe remaining the global heartland of ESG – the divergence in strategies is striking.
Based on a survey and in-depth interviews with 200 asset management executives conducted earlier this year, our data shows this paradox in motion: 45% now rank European expansion as a top priority, up from 32% last year, while their commitment to sustainable products has dropped from 43% to just 22%. European managers, by contrast, remain steady at 53%.
For an industry chasing Europe’s most promising growth segments, it raises a fundamental question: why pull back on sustainability just as Europe becomes strategically more important? And are US managers truly understanding the nuances of Europe’s sustainability landscape, or are they misjudging the opportunity?
Europe’s magnetic pull
Despite the drop in sustainability products, US interest in Europe is intensifying. Our Supermodel II report shows managers converging on three new battlegrounds in search of growth: private markets, active ETFs and the wealth channel.
Private markets are benefiting from reduced bank lending, accelerating development agendas and strong demand for sustainability-linked infrastructure. Active ETFs continue to gain traction as European investors seek cost efficiency and flexible structures. And reforms such as ELTIF 2.0 and the UK’s LTAF are widening the pathway for long-term private market investments.
That marries up with our data: 59% of managers say they are prioritising European institutional clients for sustainable products, compared to only 28% prioritising the US or Asian markets for the same.
Taken together, Europe offers a compelling strategic opportunity – provided firms adapt to its operational realities.
The sustainability paradox
Some of the decrease in ESG reflects an increasingly complex reporting environment in the US, particularly around emissions disclosures. Sustainability receives varying levels of emphasis across US regulatory and market structures, which can reduce the incentive to prioritise it globally. And there’s a lingering perception of poorer returns.
But much of the disconnect stems from how US managers perceive Europe. Too often they approach the region as a cohesive market, rather than a collection of countries with very different investor expectations. The Nordics have a deeply-rooted cultural commitment to sustainability, including the Swedish Fund Selection Agency’s prioritisation of sustainability in their four requirements. Germany and the Netherlands are shaped by stringent regulation. Southern Europe varies considerably. For institutions focused on rapid market entry, these divergences can slow launch timelines, increase costs and complicate commercial planning.
There is also a difference in expectations. European investors increasingly view ESG integration as an active process – supporting portfolio companies through transition – not simply selecting ESG-labelled assets. For managers operating on shorter timelines, or those more accustomed to a narrower definition of ESG, this can feel like a fundamental shift in scope.
Unravelling the opportunity for institutional investors
Operational readiness is critical in meeting European regulatory structures: product regimes, AML frameworks and supervisory expectations. Many US managers lack translatable infrastructure, underestimating the governance, board composition and due-diligence expectations that underpin European fund structures.
Launch timelines suffer particularly when key product decisions are made before engaging the right partners – and in our survey, only 38% of managers rate themselves ‘highly effective’ on speed to market. Some 63% say it takes them at least 10 months from ideation to launch. That’s where a third-party ManCo can bridge gaps in operational capability, regulatory understanding and local market knowledge accelerating go to market. At Carne, we typically launch funds within 90 days – and we’re now targeting 45.
A temporary reprioritisation – not a retreat
Whether the US shift lasts remains to be seen, but indications point to something more cyclical. Inflation, market uncertainty and post-Covid pressures have heightened focus on performance and cost. Many US managers are still assessing how EU frameworks – particularly the more demanding aspects of SFDR – influence product economics.
But Europe’s own trajectory has not changed. Its sustainability drivers differ by region, yet the direction of travel remains consistent. Fee pressure and operational complexity may be rising, but investor demand has not meaningfully weakened. This matters: any manager treating sustainability as a passing trend risks falling out of step with key European allocators.
The firms best placed to succeed will be those that respect regional nuances, invest in the right operational infrastructure and approach sustainability with ambition rather than hesitation.
*Carne Group partnered with CoreData to survey 200 senior executives from global asset management firms between Q2 and Q3 2025, gaining insights into their firm’s growth priorities and operational transformation strategies. Respondents represented both traditional and alternative managers, with roles across operations, finance, risk, and distribution. The findings were complemented by in-depth qualitative interviews with operations leaders from global fund houses. Data tracking the proportion of Europe-domiciled funds overseen by third-party ManCos was provided by Monterey Insight.
