The heyday of sustainable investing is over

illuminem summarizes for you the essential news of the day. Read the full piece on Axios or enjoy below:

🗞️ Driving the news: Sustainable investing in the U.S. is in decline, with record outflows from ESG funds in 2024
• Major asset managers, including BlackRock and Vanguard, have reduced their support for ESG shareholder resolutions
• Meanwhile, some firms still committed to ESG, like Parnassus, experienced the largest fund outflows

🔭 The context: U.S. sustainable funds have now faced nine consecutive quarters of outflows, while conventional funds attracted $300 billion in inflows in Q4 2024
• ESG fund launches in the U.S. have plummeted from triple-digit numbers in 2021-2022 to just 10 in 2024
• In contrast, Europe saw $52.4 billion in ESG fund inflows in 2024, though this is far below its 2021 peak of $500 billion

🌍 Why it matters for the planet: As ESG funds shrink in the U.S., companies may face less pressure from investors to act on climate and social issues
• The trend reflects both political backlash and shifting financial priorities, potentially slowing corporate sustainability efforts
• European markets continue to prioritize ESG, creating a growing divide in global sustainable finance

⏭️ What's next: More U.S. funds may drop ESG mandates or rebrand amid ongoing political and fiduciary concerns
• European regulators and investors will likely maintain their commitment to ESG investing, reinforcing regional differences
• The long-term viability of ESG strategies will depend on evolving investor sentiment and regulatory frameworks

💬 One quote: "While investing sustainably is considered a core part of fiduciary duty in Europe, it's increasingly seen as a violation of fiduciary duty in the U.S." — Felix Salmon

📈 One stat: 60 U.S. sustainable funds were liquidated in 2024, while only 10 new ones were launched

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