Sustainability-focused funds in Europe have surpassed €6 trillion in assets, according to law firm Maples Group’s Sustainable Finance Disclosure Regulation (SFDR) impact analysis, revealing a 24% rise in such funds across Ireland and Luxembourg in 2024.

The report has highlighted a 24% year-on-year increase in sustainability-focused funds —classified as SFDR Article 8 or Article 9— with combined assets now exceeding €6 trillion, up from €5.5 trillion in 2023.

Article 8 funds, often referred to as “light green” funds, promote environmental and social characteristics but do not have sustainability as their core objective. These funds include ESG factors in their investment decisions, though they may still invest in companies without high sustainability standards. In contrast, Article 9 funds, or “dark green” funds, aim for sustainable investments as a primary objective, targeting measurable environmental or social outcomes.

The findings are based on a review of more than 27,000 funds across the EU’s two major fund domiciles: Ireland and Luxembourg. According to the report, 33% of all Irish and Luxembourg-domiciled funds —over 9,000 in total— are now classified as sustainability-focused.

Nearly half of all assets in these domiciles are held in sustainable funds, with more than half (54%) of new fund launches in 2024 identified as sustainability-focused. The number of such funds has grown by nearly 60% over the past two years, with corresponding asset growth of 40%.

“2024 was undoubtedly a challenging year for the sustainability space,” said Ian Conlon, funds and investment management partner and European lead of the sustainable investing group at Maples. “Growing anti-ESG sentiment could have stifled the flow of capital towards sustainable funds. For asset levels to have grown, to now exceed €6 trillion, is truly remarkable and demonstrates not only the resilience of this sector but the continuing demand for sustainable products from European investors.”

The analysis also highlighted that over 1,800 sustainability-focused funds in Ireland and Luxembourg are now dedicated to private equity and real assets strategies. This reflects broader growth in Europe’s private equity and private debt markets.

The report also found that 43% of all ETFs are now classified as sustainability-focused, underscoring the mainstreaming of ESG themes across fund types.

“We continue to see sustainability-focused funds investing across a wide range of asset types,” added Michelle Barry, Luxembourg funds & investment management partner. “Noticeably, the portion of sustainability-focused funds investing in private assets almost doubled in 2024. Continued investor demand for private asset strategies coupled with a renewed interest in European Long-Term Investment Funds will further drive this growth in the private fund space in the coming years.”

Peter Stapleton, managing partner and global lead of the Sustainable investing Group, commented: “The continued growth in sustainability-focused funds across Europe in a volatile market is both extremely impressive and encouraging, in the context of long-term objectives. I would like to commend Ian, Michelle and our European teams for building our analysis into one of the most eagerly awaited research pieces across this sector.”

He added: “It will be of invaluable assistance to our clients who continue to navigate a complex regulatory environment. Our European thought leadership complements and builds upon the work Maples is doing across our Group for some of the largest global asset managers and their investors.”