Investors have continued to pull billions from ESG (environmental, social, and governance) funds in early 2025, amid growing political backlash and shifting federal policies under President Trump’s administration. 

In the first quarter alone, ESG funds saw $6.1 billion in outflows, marking the tenth straight quarter of declines, according to Morningstar. Much of this retreat has been attributed to the administration’s aggressive rollback of climate and DEI (diversity, equity, and inclusion) initiatives, including pulling out of the Paris Agreement and cutting subsidies for green energy. 

Despite political resistance, ESG investing remains popular among younger investors and retains institutional support, particularly in pro-ESG states like California. Analysts argue ESG strategies still offer long-term value, positioning investors in companies better equipped to handle emerging environmental and social risks. 

Finsum: Advocates maintain it's a smart approach to building resilience and returns in an evolving global economy, and necessary to combat emerging environmental issues.