Global sustainable open-end and ETFs lost around $55 billion in the third quarter of 2025, according to data provider Morningstar.
The bulk of outflows stemmed from a series of UK-domiciled BlackRock funds, following a client pension fund’s decision to move assets into bespoke ESG mandates managed by BlackRock.
Excluding those funds, global sustainable strategies still saw net outflows of an estimated $7.2 billion during the quarter, compared with restated inflows of $6.2 billion in the previous three months.
European sustainable funds faced net outflows of $3.1 billion in the quarter, reversing the $11.3 billion of inflows recorded in the second quarter. In the US, sustainable funds experienced net outflows for a 12th consecutive quarter. Elsewhere, sustainable funds in other regions collectively attracted more than $1 billion in new money.
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Fixed income was the only asset class to register positive flows, gathering approximately $12.5 billion globally. Morningstar noted that despite the outflows, total global sustainable fund assets rose by around 4% to $3.7 trillion.
Fund renaming activity in Europe continued to taper off after the EU’s fund naming guidelines took effect in May, with 118 funds renamed in the period.
“The large headline outflows from global ESG funds mask a more nuanced story. Amid macroeconomic uncertainty, geopolitical volatility, and policy shifts, we are seeing significant reallocations, with large sums moving between strategies within asset management firms and into customized institutional mandates,” said Hortense Bioy, head of sustainable investing research at Morningstar Sustainalytics. “Investor appetite for ESG funds will continue to be tested by the ongoing ESG backlash and an evolving regulatory landscape.”
