Lee Clements
Stephanie Maier
Each year for the last eight years, FTSE Russell has undertaken an in-depth survey of the attitudes of asset owners towards sustainable investment. This year, 415 investors from 24 countries around the world answered almost 70 questions on their thinking about sustainable investment, how they are implementing it across different asset classes, and what barriers and obstacles they see to its greater uptake.
In December, we released our report summarising some of the key findings from the survey and published a blog reflecting on them. But, understandably, that report could only scratch the surface of a trove of often very granular information about the philosophy and practice of sustainable investment according to these 415 asset owners.
In particular, the data shows how sustainable investment is evolving differently around the world – and where the market for sustainable finance is becoming more harmonised. Below, we dig further into the survey’s regional data.
APAC continues to rise
Historically, the Asia-Pacific region lagged Europe and North America in its embrace of sustainable investment. A less well-developed regulatory environment and economic priorities oriented towards industrial development meant that investors tended to be less focused on sustainable investment practice.
That has now squarely changed. In this year’s survey, 79% of respondents from the region said they are implementing sustainability considerations in some form compared with 74% in Europe and 71% in North America.
Implementing Sustainable Investment (% of asset owners)
The drivers are numerous. Clearly, China’s massive investments in clean energy technology have changed the calculation for investors in the region and around the world. Less well recognised is that Japan’s Green Transformation Strategy aims to mobilise more than JPY150 trillion (c. US$1 trillion) in public and private investments in pursuit of carbon neutrality by 2050. That is, by some measures, more than twice the value of the climate and energy provisions in the Biden administration’s landmark – and now largely unwound – Inflation Reduction Act.
In addition, financial centres in the region such as Singapore and Hong Kong are creating regulatory environments that are more conducive to sustainable investment. These include sustainability disclosure regimes for listed companies, green taxonomies and fund manager guidelines.
This leadership is also evident in the labelled bond markets. Green bond issuance in the region has surged, with 2025 Asian issuance ($180bn) 29% up on 2024. In April, China issued its first sovereign green bond [note1], listed in London, and onshore green bond issuance has doubled year-on-year, while Japan is pioneering a new class of sovereign transition bonds, with $3.6 billion of issuance to date.
Annual green bond issuance by region
Europe’s momentum slows
While Asia is accelerating, growth in sustainable investment in Europe has plateaued. Part of this is a function of market maturity: two-thirds of European funds qualify under either Article 8 or Article 9 of the Sustainable Funds Disclosure Regulation (SFDR). Most investors are pursuing sustainable investment in one form or another. There is limited scope for substantial further growth in Europe’s sustainable investment market.
There is also evidence that investors are digesting several years of regulatory innovation. The EU’s sustainable finance framework has, since 2020, introduced a whole raft of regulations. That framework includes the EU Taxonomy, the SFDR, the Corporate Sustainable Reporting Directive and the Corporate Sustainability Due Diligence Directive.
The survey found investors viewing this regulation as a double-edged sword. Investors in Asia-Pacific and North America were evenly split on the effects of regulation on market growth: around the same percentage judged regulation to be an enabler (22-23%) as a constraint (24%) in terms of promoting sustainable investment. In Europe, many more judged it to be a constraint (34%) than an enabler (20%).
SI regulations seen as enabler vs constraint (% of asset owners)
What is more, there has undoubtedly been a loss of confidence among Europe’s regulators and policymakers regarding sustainability. Concerns about slow economic growth and a loss of competitiveness has generated pushback against Europe’s net zero policies and its corporate sustainability agenda. The EU has responded with its Omnibus package, proposing a slowdown in its regulatory push and a simplification of sustainable investment regulation, such as with the new SFDR 2.0 proposals.
But the sense from both the survey and our conversations with clients is that sustainable investment in Europe remains widely adopted and broadly supported. While the market may have paused, it is not in retreat.
US investors step back
Where sustainable investment has most clearly pulled back is in the United States. There, only 67% of asset owners are pursuing sustainable investment.
The reasons for this retreat are well rehearsed. ‘ESG’ has become politicised over the last five years, and renewable energy and climate change have in certain fora, been the lightning rod for this politicisation.
It is noteworthy that the retreat has not been greater. We believe that this is explained by two factors. First, the ESG backlash is geographically uneven. Support for clean energy and climate action remains strong in Democrat-leaning states, such as California and New York, and asset owners in those states remain publicly committed to sustainable investment.
Second, many institutional investors in Republican areas recognise that sustainability considerations can have material impacts on risk and return, and remain privately committed to elements of sustainable investment, even if they are publicly less vocal on the subject. This is evidenced by concern about climate change: fully 91% of US asset owners were in the ‘most concerned’ category when asked about the risks posed by climate change.
We are seeing a similar mixed picture in US green bonds: our research showed a sharp drop-off in corporate green bond issuance, but a pick-up in issuance from municipalities. Here, green bonds were a key tool for financing vital infrastructure – creating a strong financial incentive to tap the market that overcame any ideological misgivings.
Regional differences in implementation, but growing commonality
Investors are clearly influenced by the local context in which they operate. For example, in terms of strategies used, far fewer US asset owners (22%) apply fossil fuel divestment strategies than their European (38%) and APAC (39%) peers.
On the other hand, ESG thematic investment is more popular in the US, where it is pursued by 70% of investors, compared with 52% in APAC and 57% in Europe. This, we believe, reflects the enthusiasm US investors often have for the possibilities offered by new technologies.
But our survey also found that, in many respects, there is a growing commonality of attitudes towards sustainable investment among asset owners around the world.
First, and as we noted in the previous blog, the sustained backlash against sustainable finance has resulted in a somewhat marginal pullback, with 73% of respondents continuing to apply sustainability considerations in their investment strategies. This figure has hardly changed over the last three years.
There is also a consistent migration towards hard-nosed risk-and-return considerations driving investor behaviour. Far fewer investors are motivated by sustainability for its own sake – instead, they want to see evidence of sustainable investment enhancing returns or reducing risk. 56% of asset owners cited achieving better risk performance and 42% cited fiduciary duty as a motivation for implementing SI in investment strategy, with the North American asset owners showing the highest citing of both factors.
And they are also consistently concerned about the risks that sustainable investment is intended to address. Across all three regions, around 85% of asset owners put themselves in the ‘most concerned’ category when asked about climate risk, compared with 76% last year. Climate change may not currently be high on the political agenda, but it remains a pressing issue for those charged with managing our pensions and investments.
7 + out of 10 concern with the investment impact of climate risk (% of asset owners)
Conclusion
Our asset owner survey is clearly detecting changing relative regional appetite for sustainable investment. However, that change is characterised as much by growth in demand in the Asia-Pacific as a recalibration in Europe or North America. And it is also detecting growing commonality among investors pursuing sustainable investment – specifically in their demand for strategies and products that deliver clear financial value for beneficiaries.
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