Global sustainable fund assets under management rose 15% to reach USD 3.9 trillion in the fourth quarter of 2025, according to TD Securities' 2025 Sustainable Finance Year in Review and 2026 Outlook. The figure, published in early March 2026, points to continued underlying demand for sustainable investment strategies despite a turbulent political backdrop, particularly in the United States, where institutional ESG investing has faced mounting scrutiny from lawmakers and state-level regulators.
Green bonds and other forms of labelled sustainable debt continued to grow over the course of 2025, TD Securities noted, even as some issuers moved away from formal sustainable labels in response to the US political environment. The pattern reflects a fragmentation in how sustainable finance is being executed globally, with demand remaining resilient in markets outside the US while American institutions navigate an increasingly complex landscape around environmental, social and governance investing.
US POLITICISATION RESHAPES ISSUANCE PATTERNS
The most visible domestic consequence of US ESG politicisation in 2025 was a sharp decline in financial-services social bond issuance, according to TD Securities' review. Issuance in this category faded considerably as diversity, equity and inclusion programmes came under sustained political scrutiny. Banks and financial institutions that had previously used social bonds to fund DEI initiatives became reluctant to attach that label to new debt, even where the underlying programmes nominally remained in place.
The retreat from social bond labelling among US financial institutions illustrates how political pressure can alter the form and visibility of sustainable finance without necessarily eliminating the underlying activity. Some issuers are choosing to fund comparable activities through unlabelled instruments to reduce their exposure to political and reputational risk. That shift complicates efforts to track the true scale of sustainability-linked financing across the market, as activity migrates away from labelled structures into the broader debt market.
Outside the United States, the picture remained more constructive. European issuers continued to dominate the green bond market, supported by a regulatory framework that actively encourages labelled sustainable debt and a policy environment that has remained broadly committed to transition finance and climate-related investment. Activity in Asia also continued to develop, with sovereigns and quasi-sovereigns contributing to overall market growth.
GROWTH PERSISTS THROUGH MARKET EVOLUTION
The 15% rise in global sustainable fund AUM to USD 3.9 trillion reflects both new inflows and the appreciation of underlying assets during 2025. The figure underscores that institutional and retail demand for sustainable investment exposure has not collapsed in the face of US political headwinds, though the composition of that demand — and the geography of primary sustainable bond issuance — continues to shift away from the US and towards European and Asian markets.
TD Securities' review highlighted the resilience of the green bond segment specifically, noting that growth persisted even as labelled issuance by US financial services firms pulled back sharply. The divergence between the strength of green bond supply and the weakness in US social bond issuance captures a broader dynamic in which the environmental pillar of ESG has proved more commercially and politically durable than the social and governance pillars under the current US policy climate.
The 2026 outlook section of TD Securities' publication flagged continued growth potential in sustainable debt markets, identifying transition finance and nature-related bonds as areas of developing issuance interest. The findings represent TD Securities' own assessment of the market landscape and are drawn from the bank's research and capital markets data as of the publication date.