The amount of money invested with ESG (environmental, social, and governance) factors in mind is set to soar. For ESG investors, this could mean there are more options and information to draw on when you’re making decisions.
According to an article published by Sustainability (7 May 2026), analysis suggests the ESG market was valued at around $37.8 trillion (£28 trillion) in 2025. It’s projected to grow around 17.3% a year to reach $186.9 trillion (£138.9 trillion) in 2035.
There are several factors that are predicted to drive this growth forward.
4 reasons the ESG investment market is predicted to grow
1. ESG investing is set to become mainstream for large investors
The article notes that ESG is expected to move from a niche option to a main strategy for the world’s largest investors, such as pension funds, insurance companies, and sovereign wealth funds.
As these types of investors invest huge sums, even a small shift in their strategy could lead to inflows into ESG investing jumping. If ESG is an approach they adopt over the next decade, it could transform the sector.
The focus of institutional investors could also mean that even if you don’t make any adjustments to your investments, your exposure to ESG investments might rise. For example, your pension is typically invested through a fund, which might begin to consider more ESG factors.
2. New ESG reporting rules make it easier to compare ESG credentials
In the past, it has been difficult to compare ESG investment opportunities.
There aren’t standard ways of presenting the information, and some companies do not provide details beyond what was legally required. Even investment funds claiming to be ESG-focused were challenging to compare, as there were no clear definitions for terms like “ESG”, “sustainable”, or “green”.
This is now changing, with new rules in the UK, EU, and US about disclosure and how information is presented.
There are still improvements to be made, but it’s likely that, as ESG investing grows, new rules will be implemented.
3. Opportunities in transition finance have been identified
The study noted that one area that asset managers could focus on is transition finance.
It’s suggested that investors embracing ESG factors will move beyond avoiding certain companies or industries, such as fossil fuels. Instead, there will be a focus on how investment can help companies transition to low-carbon operations.
This remit could expand even further. For example, investors might invest in companies that are finding ways to improve their relationship with local communities, implement new strategies for waste management, or reduce environmental degradation.
4. The rise of green bonds presents an attractive opportunity
Green bonds are now the fastest-growing type of investment, with an anticipated annual growth rate of 23.8% through 2035. This growth could help large investors balance risk, returns, and sustainability goals.
As green bonds are typically issued by governments and companies to raise money for specific projects, they could make it easier to assess the impact of the investment. For example, you might know your money has supported initiatives in renewable energy or building infrastructure for clean public transport.
Individual investors could benefit from the growth in ESG investing
While institutional investors are expected to drive a large portion of the investment flowing into ESG investment opportunities, there are still ways individual investors could benefit.
A growing interest in ESG investing could mean there are more funds tailored to different aspects of ESG, so you’re better able to tailor your decisions to your values and needs. In addition, a greater focus on reporting could make it easier to compare different investment opportunities.
It’s important to remember that you still need to consider your risk profile and investment goals when making ESG investment decisions. All investments carry risk, and the value of your investments may fall as well as rise. An investment that aligns with your values may not fit into your wider investment strategy.
Get in touch to talk about ESG investing
If you’d like to review your overall investment strategy to incorporate ESG factors, please get in touch. We could work with you to create a strategy that brings together your goals, risk profile, and values.
Please note:
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.