Young investors report high interest in sustainable investing, yet global ESG funds suffered massive withdrawals last year.
Global ESG funds recorded $84bn in outflows during 2025, despite strong verbal support for sustainable investing among younger generations. A Morgan Stanley survey found 99% of Gen Z and 97% of Millennial investors with over $100,000 in assets expressed interest in ESG options, with half allocating 21-50% of portfolios to such assets.
The disparity highlights a gap between sentiment and action, as Baby Boomers remain far less engaged in sustainable investing. While younger investors are positioned to drive future ESG growth, current fund flows suggest hesitation or shifting priorities. Morningstar data underscores the trend, revealing declining allocations even among demographics most vocal about sustainability.
No immediate market reaction was reported, but the mismatch between stated preferences and actual investments may pressure ESG fund managers to reassess strategies.