ESG investing gains momentum amid strong performance and climate focus

Perhaps it’s quieter than the headlines of a few years ago, but enthusiasm for environmental, social and governance (ESG) investing has not gone away , and it is evident among many professional investors. That appetite helps explain renewed interest in niche exchange‑traded funds such as the Invesco ESG Nasdaq 100 ETF (QQMG) and the Invesco ESG Nasdaq Next Gen 100 ETF (QQJG), which have benefitted from another strong year for growth stocks and are on pace for solid 2025 showings.

According to the original report, a Morgan Stanley poll of money managers and institutional investors across Asia‑Pacific, Europe and North America found that 80% of asset allocators plan to boost exposure to sustainable investments. Industry data shows North America led regions in the proportion of professional investors intending to increase ESG allocations, a dynamic that could favour US‑listed ESG strategies such as QQMG and QQJG.

Performance expectations are a key part of why many allocators are warming to ESG. “Asset owners cited performance-related criteria as the most significant drivers of their plans to increase allocations to sustainable investments, with strong financial performance of sustainable investments or ESG strategies emerging as the top reason, reported by 22%, followed by 18% of asset owners who said that sustainable investing is becoming more mature as a strategy with an established track record,” reported Mark Segal for ESG Today. That framing , which highlights financial returns alongside maturation of ESG approaches , underscores why some market participants now view ESG products less as a niche ethical play and more as mainstream strategy choices.

Climate risk is another important motivator. The survey pointed to a growing focus on climate adaptation opportunities as investors increasingly see climate change as a portfolio risk. “The growing focus on climate adaptation investment opportunities comes as investors increasingly view climate change as a risk to their portfolios, according to the survey, which found that more than three-quarters of investors expect physical climate risks to have a major impact on asset prices in the next five years, including 35% anticipating major pricing impacts that are widespread across the market, and 42% that expect some major pricing impact on a limited number of assets,” the ESG Today write‑up said. That concern reinforces demand for funds that incorporate climate‑related screens or align with recognised principles.

Invesco’s Nasdaq ESG‑linked ETFs follow indices that the original report says adhere to UN Global Compact guidelines, which contain climate‑specific protocols. The company claims those index methodologies provide climate exposure while remaining connected to large‑cap, growth‑oriented technology and next‑generation names , a combination that, in the current market, can deliver both ESG credentials and upside participation in secular growth themes.

Complementing the institutional picture, the Morgan Stanley Sustainable Signals press release shows robust retail interest as well: 77% of individual investors globally say they are interested in sustainable investing, and 54% plan to increase their sustainable allocations in the next year. The release also found that a majority of individual investors expect companies to address environmental and social issues and that 51% would consider investing in traditional energy firms that present robust transition plans. Those retail intentions suggest demand could come from multiple investor segments, not only institutional allocators.

Despite the encouraging signals, market participants and product designers face ongoing tests. Surveys and industry commentary indicate expectations for ESG performance are rising, which increases pressure on funds to demonstrate both sustainability credentials and competitive returns. Meanwhile, differing ESG definitions, index methodologies and regulatory scrutiny in some jurisdictions continue to complicate comparisons across products.

For now, the combination of professional and retail interest, heightened focus on climate risk and the performance narratives cited by asset owners create a more favourable backdrop for ESG‑branded ETFs linked to large‑cap growth exposures. The company statements and survey findings suggest that, although the ESG conversation has evolved, the appetite among many investors remains substantial , and that could sustain longer‑term adoption of funds like QQMG and QQJG as managers attempt to marry measurable sustainability rules with mainstream investment outcomes.