An increasing proportion of asset owners globally reported implementing sustainability considerations in their investment strategies over the past year, despite geopolitical headwinds, with investment performance and risk management increasingly emerging as top drivers for sustainable investing, according to a new survey released by index provider FTSE Russell.
For the report, FTSE Russell’s “8th Annual Sustainable Investment Asset Owner Survey 2025,” FTSE Russell surveyed 415 assets owners – including pension funds, insurance companies, sovereign wealth funds, endowments and family offices – from 24 countries across EMEA, North America and Asia Pacific, including 24% with assets greater than $100 billion, 46% with assets between $1 billion and $100 billion, and 30% with assets under $1 billion.
The report sustainable investing is widespread, with 73% of asset owners reporting that they are currently applying sustainability considerations to their investments, rising slightly from 71% in 2024, after falling from 74% in 2023. Additionally, another 23% of asset owners reported that they are considering whether to begin applying sustainability factors in the future.
As the use of sustainability factors by asset owners grows, the survey found that financial performance and risk management factors have emerged as top drivers, with achieving better risk-adjusted performance as the most cited motivation by respondents for implementing sustainability considerations at 56%, up from 47% in 2024, followed by mitigating long-term investment risk at 54%, up from 46% last year. Similarly, capturing investment returns from sustainable investment opportunities increased significantly as a driver, cited by 54%, up from only 32% last year.
Notably, a much larger proportion of asset owners listed fiduciary duty as a motivator for using sustainability considerations, at 42%, rising sharply from only 14% in 2024.
Additionally, “societal good” fell to last place as a motivating factor, down from third place last year.
Asset owners’ focus on returns and risk in their decisions to implement sustainability considerations comes as they appear increasingly wary of climate risk, according to the survey, with 85% of respondents reporting being significantly concerned about the investment impact of climate risk, rising steadily from 76% in 2024, and from only 50% in 2023.
The survey also examined key barriers to asset owners’ increased adoption of sustainable investment, with greenwashing risk emerging as the top barrier at 37%, followed closely by the availability of ESG data and concerns about the use of estimated data at 36%. 28% of respondents reported regulation as a potential constraint, with different disclosure requirements and taxonomies, and an inability to align portfolios with sustainable investment or climate requirements set out by regulators as top issues presenting challenges in meeting regulatory requirements.
The report also surveyed asset owners on their sustainable investment approaches, finding ESG integration as the most commonly used approach, applied by 61% of respondents, followed by thematic ESG investing at 60%. The survey also found that engagement is gaining popularity, with 67% of asset owners preferring engaging with high carbon companies, compared with only 21% preferring a divestment approach.
Stephanie Maier, Global Head of Sustainable, FTSE Russell, said:
“Global asset owners’ commitment to integrating sustainability considerations remains steady. Against a backdrop of geopolitical headwinds, investor concerns regarding climate and broader sustainability risks continue to intensify and the focus on financial performance remains a central priority. This shift signals that sustainable investment is becoming a core component of fiduciary responsibility.”
Click here to access the survey.
