Sustainable Investing Isn’t Retreating—It’s Deepening

Key Takeaways:

• Integration of sustainable investing remains resilient, with most managers maintaining or increasing their focus year-over-year.
• A growing share of managers are expanding their sustainability data and research capabilities beyond the major providers.
• The proportion of assets managed toward sustainable outcomes appears unaffected by negative media sentiment.

For all the headlines questioning its future, sustainable investing remains entrenched in the way asset managers operate.  Environmental, social and governance (ESG) allocations are holding firm, and integration continues to deepen.

According to our research of money managers globally, ESG allocations have held steady year-over-year, with more managers expanding their integration than scaling them back. Importantly, over 80% of respondents report that client interest in ESG has either remained stable or increased.

This resilience suggests that sustainable investing has matured beyond being a thematic or values-driven exercise and it is now a strategic component of risk and return management.

Most clients’ ESG focus remains stable, with selective increases and limited declines

Question: Clients’ focus on ESG (up, stable, down).

Source: 11th Annual ​Manager Sustainable Investing Survey

The growth in ESG data usage shows how firmly it is embedded in investment practice. While most firms still rely on MSCI, Bloomberg, and Sustainalytics, nearly a quarter are adding new providers to deepen their analysis and broaden their perspectives.

The “Other” category—accounting for 21%—includes climate scenario vendors, consultants, and proprietary systems, reflecting a rising demand for more specialised and customised insights. This shift signals a maturing ESG landscape, where managers are expanding their sustainable offerings and integrating data more deeply into their investment decisions.

Nearly a quarter of respondents are adding new providers

Question: New ESG data/research providers added in the past year.

Source: 11th Annual ​Manager Sustainable Investing Survey

From an AUM perspective, sustainable investing remains firmly embedded in portfolios. Despite the political noise, allocations appear largely unchanged: 44% of respondents said that 1–20% of their assets are managed to sustainable or ESG objectives, which is broadly consistent with last year.

The share of firms without ESG products fell slightly to 38%, suggesting that complete disengagement from sustainable investing is becoming increasingly rare. For investors, the message is clear: ESG exposure is now part of mainstream asset allocation and the persistence of capital in these strategies points to structural, long-term demand, rather than a passing trend.

AUM managed via sustainable investing remains at similar levels to 2024

Question: Proportion of AUM in sustainable/ESG funds/mandates.

Source: 11th Annual ​Manager Sustainable Investing Survey

What does this all mean for investors? Our research indicates that a retreat in the integration of sustainable investing is not underway. In fact, the resilience of manager and client appetite suggests that sustainable allocations are less exposed to short-term political or market cycles. We believe this reflects a maturity of the market where the competitive edge will lie in how effectively managers link ESG insights to performance and long-term client outcomes.

In short, it is no longer a question on whether sustainability matters, but how well it is executed.

If you would like to learn about Russell Investments’ approach to stewardship and manager research process, please get in touch.

Any opinion expressed is that of Russell Investments, is not a statement of fact, is subject to change and does not constitute investment advice.

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