Over the past two decades, ESG has grown from a niche concept to a $30 trillion force shaping banking, asset management, insurance, and pensions. But this growth has not been linear, and today, ESG finds itself at a crossroads. A wave of political backlash, regulatory recalibration, and strategic repositioning is reshaping the ESG landscape in global finance.
This report provides a data-rich assessment of the current state of sustainable finance. It evaluates the decline in public commitments, the real value and market penetration of ESG-labelled activity, and the implementation gap between ESG pledges and action. Drawing on analysis across key financial sectors and major regions, the report maps how firms are adapting, or retreating, in the face of mounting pressures.
Despite the backlash, Europe has emerged as a relative anchor of ESG commitment and market activity. But even here, the balance between sustainability and competitiveness is under review. This report offers a fresh perspective on how ESG can evolve: not just to survive the current turbulence, but to emerge with a more resilient and credible framework.
$3 trillion
The total value of sustainable investment fund assets in 2024, double that of 2019
85%
Is the European share in sustainable funds market
20%
penetration of ESG investment funds in European investment fund markets
Key highlights
Some of the report’s key highlights include:
- 10 Challenges Behind the Backlash
From regulatory fatigue and short-termism to increased politicisation and confusion over what ESG really means, the report outlines the key headwinds ESG is facing globally. - Faltering Commitment
Public ESG commitments by financial firms have dropped 15% globally since 2022, with the US and APAC accounting for most of the retreat. Europe remains broadly steady, but the direction of travel is uncertain. - A resilient outbound
Despite political headwinds, the ESG bond market has grown steadily for two years in a row. In 2024, total labelled bond issuance reached $950bn, up from $855bn in 2022, with Europe maintaining a leading share of global activity. - ESG in Name, Not in Action
Less than 4% of capital markets financing in 2024 went to ‘good’ ESG-aligned companies. Engagement levels remain low, particularly in insurance and pensions. - Toward a More Sustainable ESG
The report offers principles for reform: simplified global rules, better alignment with fiduciary duty, a stronger role for private markets, and a clearer narrative for ESG’s future.