European sustainable fund flows turn positive

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Global sustainable open-end and exchange-traded funds returned to positive territory in the first quarter of 2026, recording estimated net inflows of USD 3.5 billion, compared with restated outflows of USD 27 billion in the fourth quarter of 2025. The recovery was driven by a strong turnaround in European flows.

European sustainable funds returned to positive flows for the first time since the third quarter of 2024, attracting net inflows of USD 9.1 billion in the first quarter of 2026, driven by a surge in passive fund inflows.

In the US, sustainable funds saw net outflows for the 14th consecutive quarter, totaling USD 4.3 billion in the first quarter of 2026.

The rest of the world, in aggregate, recorded net outflows. Canada and Australia/New Zealand were the only regions outside Europe to record positive flows.

The ongoing anti-ESG political backdrop, particularly in the US, and mixed performance, combined with renewed market volatility driven by heightened geopolitical uncertainty, continued to weigh on sustainable fund flows into 2026.

Global sustainable fund assets declined by approximately 10% in the first quarter of 2026 to USD 3.51 trillion, compared with USD 3.90 trillion at the end of 2025, driven primarily by market volatility. Since the end of 2018, global sustainable fund assets have grown nearly sixfold from roughly USD 600 billion.

Product development activity dipped to new lows, with just 17 new sustainable funds launched globally in the first quarter of 2026—down sharply from a revised 50 in the prior quarter.

Global Sustainable Fund Statistics

Photo credit: Morningstar Sustainalytics

For more details refer to the report attached.

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