From Integration to Impact: ESG & Sustainability in UK & European Fund Markets 2026

The 2026 ESG & Sustainability Barometer is the fifth edition of the firm’s flagship annual review of sustainability trends across the European and UK fund universe.

A key finding is that while greenwashing risk is stabilising, it remains material: around 25% of Article 8 funds score below MainStreet’s 3.0/5.0 ‘ESG Assessed’ threshold, and 30% of Article 9 funds fall short of the 4.0 ‘Sustainability Assessed’ threshold, although only 5% of Article 9 funds score below 3.5.

Asset Manager scores continue a multi-year decline, as rising standards and regional divergences in ESG expectations push average ratings lower across fund categories.

Sustainable opportunity sets remain uneven, with environmental strategies accounting for over €75bn in AUM across 110 funds, compared with €17bn across 38 social funds; despite a strong 4.3/5.0 average rating, social funds remain underrepresented due to the lack of a social taxonomy and more qualitative data inputs.

New regulation will reshape the market: under SFDR 2.0’s three-category system (ESG Basics, Transition, Sustainable), 67% of existing funds would fall into ESG Basics, 19% into Transition and just 14% into Sustainable, highlighting the higher bar for the latter.

The report also notes that ESMA Naming Guidelines and the FCA’s SDR are influencing behaviour, with naming-related penalties declining from 7% to 4.6%, reflecting closer alignment between fund names and sustainability commitments.