What began as a tool for measuring risks evolved into a normative framework, only to return under political pressure to its core: the G. After 25 years, ESG has come of age, but not without scars.
The rise of sustainable investing is one of the most far-reaching changes in asset management over the past quarter century. Investment Officer asked asset managers to look back on this development. Their conclusion? ESG has moved beyond the hype phase. “ESG has matured,” said Robert Koopdonk, head of the Netherlands and Nordics at Natixis. “It is no longer a trend, but a structural part of how forward-looking players invest and create value.”
A human face for the market
The roots of ESG go back further than is often assumed. As early as 1999, UN secretary-general Kofi Annan argued at the World Economic Forum for “a global compact of shared values that gives the global market a human face.” A year later, he launched the UN Global Compact, based on principles around human rights, labor rights, and the environment.
In January 2004, Annan wrote to 55 CEOs of major financial institutions. In December of that same year, the “Who cares wins” report was published, signed by 23 institutions representing more than 6,000 billion dollar in assets under management. The core message: successful investing depends on a vital economy, which depends on a healthy society, which ultimately depends on a sustainable planet.
Acceleration after 2015
An important turning point came in 2006 with the UN Principles for Responsible Investment. After 2015, the movement accelerated: the Paris Agreement and the UN Sustainable Development Goals acted as catalysts. In Europe, ESG became part of the standard toolkit; regulation such as SFDR and the EU taxonomy made sustainability measurable.
Prosper van Zanten, managing director Netherlands at Columbia Threadneedle: “ESG has evolved from a peripheral consideration into a central pillar of the investment philosophy. It now influences risk assessment, long-term value creation, and alignment with stakeholders.” That integration required adjustments. Jacob Vijverberg, head of asset allocation at Aegon Asset Management: “This calls for more transparency, deeper analysis, and continuous dialogue with companies.”
Popularity also had a downside: the explosion of ESG funds led to criticism of greenwashing, superficial sustainability that looked impressive on paper through creative data selection, but failed to deliver in practice.
The wind shifts
After 2020, sentiment began to change, particularly in the United States. ESG was increasingly dismissed as “woke capitalism,” with “go woke, go broke” as a rallying cry. At the end of 2022, Vanguard became the first major player to leave the Net Zero Asset Managers Initiative. In early 2025, an exodus followed: Blackrock, State Street, JP Morgan Asset Management, Pimco, Franklin Templeton, and Nuveen exited similar climate initiatives. The initiative subsequently suspended its activities.
While in the United States mainly the first part of “Who cares wins” seems to have stuck—Who cares?—ESG remains broadly embedded in Europe. Maxime Carmignac, managing director of Carmignac UK: “Our clients remain actively engaged. What is changing is that superficial, marketing-driven ESG practices are being exposed as weak. But that was never what sustainable investing was truly about.”
Transatlantic divide
The figures also show a growing divide between the United States and Europe when it comes to sustainability. US sustainable funds saw net outflows of 19.6 billion dollar in 2024, the second consecutive year of withdrawals. Moreover, only ten new funds were launched, while 71 funds closed. Another 24 funds dropped their ESG mandate. Europe now manages 84 percent of global assets in sustainable funds, amounting to nearly 2,700 billion dollar, according to data from Morningstar Sustainalytics.
Vijverberg: “The vast majority of our clients remain committed to sustainable investing. They do not see ESG as a trend, but as an essential component of responsible asset management.” He does note that regulation can sometimes overshoot: “Complex reporting requirements do not always bring the ultimate goal—a more sustainable economy—any closer.”