Sustainability-labeled funds raise a combined $167bn in 2025

Sustainability and the energy transition may not be dominating the news agenda, but they remain at the forefront for many investors, as we highlighted in Preqin First Close last month. Here, we take a second look at one of the best years on record for sustainability-labeled funds.

Global sustainability market reached new heights in 2025

In 2025, sustainability-labeled funds captured almost 13% of all private capital fundraising (totaling approximately $1.3tn, according to Preqin data) (Fig. 1). The aggregate total for 2025 hit $167bn, surpassing the 2024 figure and hitting a new high for private markets.

Fig. 1: Sustainability-labeled funds’ share of total private capital fundraising over time, 2020–2025

_{Source: Preqin Pro. Data as of January 2026}

These funds have either received regulatory labels, such as SFDR Article 8 and Article 9, or have thematic labels that managers use to distinguish them, like climate, impact, or ESG integration (as we explain here).

Since picking up steam in 2020, when sustainability-labeled funds took only a 3% share of new money, these funds have shown resilience despite the fundraising slowdown. Their share of aggregate capital raised has increased each year, except in 2023.

Infrastructure funds have become increasingly dominant, capturing 65% of aggregate capital raised, up from 48% in 2024 (Fig. 2).

Fig. 2: Sustainability fundraising by asset class and infrastructure share, 2020–2025

_{Source: Preqin Pro. Data as of January 2026}

This rise is in large part due to the demand for energy transition-related funds, which is now the second-largest fund label in Preqin data by aggregate final-close size, surpassing climate-labeled funds for the first time.

Meanwhile, SFDR 8-labeled fundraising has been the strongest globally each year for the past five years, closing out 2025 with $81.4 bn in aggregate.

Europe remains the top destination for sustainability fund commitments

Regionally, Europe still leads when it comes to sustainability-labeled fund commitments. The region ended 2025 with an aggregate final-close size of $94.5bn from 137 funds, according to Preqin data (Fig. 3). Year-over-year aggregate final-close sizes have fluctuated from a high of almost $109bn in 2022 to a low of $68.5bn in 2023.

‘Europe will likely remain the global leader,’ says Jaclyn Bouchard, Head of Aladdin & Preqin Sustainability Product at BlackRock. ‘The twin forces of the mandatory SFDR regime and GHG reduction targets, which were agreed last year and are legally binding for EU members, should ensure continued momentum and growth of sustainability-aligned private markets.’

Fig. 3: Sustainability fundraising by region, 2020–2025

_{Source: Preqin Pro. Data as of January 2026}

In Europe, climate-labeled funds captured the second largest aggregate final-close figure at $34.7bn, behind SFDR 8 funds ($46.8bn) which have consistently taken the top spot for the past five years (Fig. 4).

Beyond SFDR 8 and climate labels, Europe’s sustainability funds received a more even distribution than other regions, with the smallest labels, SFDR 9 and SDG, still capturing $20.6bn and $15.8bn, respectively.

Fig. 4: Europe sustainability fundraising by legacy fund label, 2020–2025

_{Source: Preqin Pro. Data as of January 2026}

North America sustainability-labeled funds surpass 2022 record

In North America, aggregate final-close size for sustainability-labeled funds hit a new record for the region in 2025 at $63.9bn, surpassing the previous high-water mark of $54.9bn in 2022.

This was captured by only 43 funds combined, the lowest number in the region since 2018. Growth has in part been anchored by established managers such as GIP (like Preqin, a part of BlackRock), Brookfield, and Blackstone, which together accounted for $50.8bn of the aggregate final-close size last year.  
 
According to Preqin data, 12 of these 43 North America-focused funds are in private equity, 15 in VC, seven in real estate, six in infrastructure, and three in natural resources.

This record year comes off the back of significant changes in the pattern of total capital raised by various sustainability fund labels. Labels such as climate and impact, which have historically been the pillars of sustainability fundraising in the region, dropped to just under $2.6bn each, significantly lower than their peak of more than $38bn each in 2022 (Fig. 5).

Conversely, SFDR 8 and energy transition funds in North America each saw sharp increases in fundraising, going respectively from $1.2bn and $10.7bn in 2024, to $34.6bn and $28.8bn in 2025.

Fig. 5: North America sustainability fundraising by legacy fund label, 2020–2025

_{Source: Preqin Pro. Data as of January 2026}

Will sustainability fundraising in North America in 2026 build on the success of 2025? ‘US GPs raise capital globally. If they want European institutions in their funds, SFDR is not optional,’ says Jaclyn. ‘Even within the US, many investors remain committed to their net zero targets and to sustainable and transition investing.’

Hayden O’Bryan is Associate, BlackRock.

Second Look is edited by Libby Fennessy, Production Editor of Preqin First Close.

Read the original story in Preqin First Close here.

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_{The opinions and facts included in the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin accepts no liability for any decisions taken in relation to the above.}