Sustainable Investing: Turnaround Expected in 2026?
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Key Takeaways
- Global sustainable funds recorded net outflows of 84 billion US dollars in 2025 following inflows of 38 billion in 2024 (Source: Morningstar Germany)
- Oliver Pfeil, CEO of ÖKOWORLD AG, describes 2026 as a potential turning year for sustainable investing
- Sustainable investment strategies grew by 35 percent between 2009 and 2011 and significantly outperformed overall market growth
- The Forum Sustainable Investments (FNG) has published sustainability profiles since 2012 with investment strategies and key data on sustainable investment funds
- Sustainable equity ETFs enable cost-effective and broadly diversified investment in companies with defined sustainability standards
Global sustainable funds recorded net outflows of 84 billion US dollars for the full year 2025, according to Morningstar Germany. In the previous year, inflows of 38 billion US dollars had flowed into this asset class. This marked shift in sentiment shows that sustainable investments, following a phase of hype, are now facing significant headwinds.
Industry Expects Turnaround in 2026
Oliver Pfeil, CEO of ÖKOWORLD AG, sees 2026 as a potential year of turnaround. Following the turbulence of the previous year, industry estimates suggest that many investors will again recognize the importance of sustainable investing more strongly. The capital outflows of 2025 could thus represent a correction phase following inflated expectations – and not the end of a long-term trend.
Historical development supports this assessment: Between 2009 and 2011, sustainable investment strategies grew by 35 percent and significantly outperformed overall market growth. Such growth phases demonstrate that sustainable investments do appeal to investors when appropriate conditions are in place.
What Is Sustainable Investing?
The term Socially Responsible Investment (SRI) – a form of sustainable investing – is used differently internationally. According to Gabler Banking Dictionary, definitions range from investments that consider only social criteria alongside economic aspects to approaches that additionally include environmental criteria. This diversity shows that the market for sustainable investments does not constitute a uniform category but encompasses various approaches and priorities.
In practice, sustainable investments often rely on ESG criteria – the acronym stands for Environmental, Social, and Governance. Companies are evaluated not only on financial metrics but also on their ecological and social responsibility.
Sustainable ETFs as Cost-Effective Entry Options
Sustainable equity ETFs (Exchange Traded Funds) enable investors to invest simply and cost-effectively in companies meeting specific sustainability standards. An ETF is a stock exchange-traded index fund that replicates an index of multiple securities and is traded on the stock exchange like a stock. These instruments offer broad diversification without high fees – an advantage over actively managed funds, which often incur higher management costs.
Investors find a growing selection of sustainable ETFs on the market that follow different strategies: some completely exclude certain sectors such as defense or fossil fuels (negative criteria), while others deliberately select companies with above-average ESG performance (positive criteria).
Guidance for Investors
The Forum Sustainable Investments (FNG) has published sustainability profiles since 2012, providing investors with an overview of sustainable investment strategies and relevant key data on sustainable investment funds. These profiles help compare the various approaches and their concrete implementation – an important guide given the different definitions and priorities in the market.
For private investors in the DACH region, this transparency is particularly relevant, as sustainable investments do not automatically guarantee uniform quality or orientation. Those investing in sustainable funds or ETFs should carefully examine the specific selection criteria and exclusions – the range between different products can be considerable.
Outlook for Future Market Development
The 2025 outflows are likely to sustainably change the market for sustainable investments. Products with weak sustainability standards or purely marketing labels could come under pressure, while providers with credible strategies will hold their ground. Whether 2026 will indeed bring the turnaround hoped for by industry representatives depends also on regulatory developments and the general market situation.
Investors who think long-term and value sustainability criteria will continue to find instruments in ETFs and funds that combine both objectives. The current correction phase could help correct inflated return expectations and refocus on the actual sustainability impact.