Institutional Investors Sharpen ESG Investment Focus

Institutional investors are doubling down on sustainable investing with greater precision, strategic intent, and a firm belief in its long-term value, according to BNP Paribas’ 2025 ESG Survey. Conducted across 29 countries and involving 420 respondents managing a combined USD 33.8 trillion in assets, the fifth edition of the biennial survey paints a picture of an ESG landscape undergoing a significant transformation—from broad-stroke commitments to targeted, impact-oriented investments.

Despite global economic headwinds and geopolitical uncertainty, ESG momentum remains robust. An overwhelming 87% of institutional investors report that their sustainability goals remain unchanged, signaling a deep-rooted commitment to responsible investing. Even more telling, 84% believe the pace of progress in ESG will either continue or accelerate by 2030. While communication about sustainability has become more cautious—perhaps reflecting increased scrutiny and the politicisation of ESG discourse—actual commitment among investors remains as strong as ever.

This year’s survey reveals a clear evolution in strategy. Institutional investors are moving beyond generalised ESG approaches and adopting more thematic, data-driven, and performance-oriented frameworks. The shift is evident in the growing adoption of thematic investing: 59% of investors are now pivoting to ESG themes like the energy transition, low-carbon technologies, and active ownership, selecting sectors and regions where their investments can yield measurable impact and competitive returns. A striking 85% of investors are already integrating ESG criteria into their investment decisions, underscoring the mainstreaming of sustainability within institutional portfolios.

Key priorities for the next two years reflect a sharper focus on high-impact areas. Nearly half of the investors—49%—plan to increase their allocations to energy transition assets, which include renewable energy, energy efficiency technologies, and infrastructure supporting net-zero goals. At the same time, 47% aim to use active ownership to drive internal ESG objectives, while 46% are committed to increasing exposure to low-carbon assets and divesting from carbon-intensive holdings. This reallocation suggests a more strategic, values-aligned approach to risk management and long-term value creation.

Among the 420 institutional participants, a distinct group—identified as “pacesetters”—are leading the ESG transformation with ambitious targets. Representing 19% of the surveyed base, these advanced ESG investors are focused on achieving real-world impact and performance. A remarkable 95% of these leaders prioritize portfolio decarbonisation, making it a core investment objective. Social impact also ranks high on their agenda, with 94% targeting investments that generate equitable outcomes. Furthermore, 86% focus on biodiversity, recognizing its importance in climate resilience and ecosystem sustainability, while 68% actively support the just transition—a concept ensuring that the move to a low-carbon economy is fair and inclusive.

Private capital firms are also emerging as key players in the ESG domain. As agile and increasingly influential actors, they are aligning investment strategies with long-term sustainability trends. According to the survey, 76% of private capital managers prioritize social issues, while 63% are investing in the just transition, and 51% are relying on active ownership to meet ESG goals. These firms view ESG not just as a compliance metric, but as a driver of financial performance and stakeholder value, especially in areas like decarbonisation and community resilience.

The growing need for quality ESG data is another central theme in the BNP Paribas survey. Nearly half of the institutional investors—48%—plan to increase their ESG budgets, specifically earmarking funds for enhanced data acquisition and analytics. The rationale is clear: better data enables more informed decisions, improves transparency, and strengthens the ability to measure impact. ESG brand reputation also plays a significant role when selecting banking partners, with 51% of investors prioritising this attribute. Product expertise (40%) and long-term client commitment and shared values (33% each) further influence these partnerships.

BNP Paribas’ 2025 ESG Survey ultimately reflects an investment landscape where ESG is no longer seen merely as a tool for alignment or compliance, but as a vital pathway to achieving alpha—the investment world’s benchmark for outperformance. Institutional leaders are no longer satisfied with vague commitments; they seek measurable, strategic outcomes that align with both fiduciary responsibilities and global sustainability goals.

As ESG strategies mature, the focus is clearly on precision, data, and impact. From thematic investments in energy transition and biodiversity to active ownership and social equity, institutional investors are demonstrating that sustainable investing is not just good ethics—it’s smart economics.

Institutional Investors Sharpen ESG Investment Focus