Ian Conlon

A review of over 27,000 funds across the two largest fund domiciles in the EU, Ireland and Luxembourg, has revealed how the Sustainable Finance Disclosure Regulation (SFDR) continues to transform the European asset management landscape.

The number of sustainability-focused funds (i.e. either SFDR Article 8 or SFDR Article 9 funds) grew by 24 per cent in 2024, with assets now surpassing €6 trillion, rising from €5.5 trillion in 2023.

A third of all Irish- and Luxembourg-domiciled funds are sustainability-focused funds, and nearly half of all assets held in Irish- and Luxembourg-domiciled funds are now held in sustainability-focused funds.

A majority (54 per cent) of all new funds launched in Europe in 2024 were established as sustainability focused funds.

Over 1,800 sustainability-focused funds in Luxembourg and Ireland are focused on private equity and real assets strategies, mirroring the growth in the European private equity and private debt space.

Sustainable ETFs also continue to thrive and 43 per cent of all ETFs are now sustainability-focused funds.

The new analysis was carried out by lawyers from the Maples Group’s Irish and Luxembourg sustainable investing team.

Ian Conlon, funds and investment management partner in Dublin and European lead of the sustainable investing group, said: “2024 was undoubtedly a challenging year for the sustainability space. Growing anti-ESG sentiment could have stifled the flow of capital towards sustainable funds.

“For assets 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.

“Asset managers are recognising that in order to successfully fund raise in Europe, their strategies need to be SFDR-aligned.

“Our analysis shows that global asset managers are not retreating from sustainable investing — there is more customisation occurring, with sustainable focussed products being developed and specifically tailored for the European investor market.”

Peter Stapleton, Ireland managing partner and global lead of the sustainable investing group, added: “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 [Barry in Luxembourg] and our European teams for building our analysis into one of the most eagerly awaited research pieces across this sector. 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.”