A look back at ESG in 2024 – a turbulent year for the private market ESG landscape

In the final months of 2024, geopolitical events headlined by US President Donald Trump’s second term appeared to augur in a fragmented and uncertain ESG landscape in 2025.

However, these disruptions have obscured how ESG trends in 2024 could set the stage for the private capital outlook in the coming years. While all eyes have been on the US to discover what effect the new administration might have on global sustainability efforts, market developments in Europe, North America, Asia, and the rest of the world exemplify ESG’s continued evolution.


The 2024 ESG landscape

Following the fundraising slowdown across alternatives in 2023, ESG fundraising has since rebounded. ESG funds account for 14% of aggregate final close sizes in 2024, a significant increase from 10% in 2023, and 3% in 2020 (Fig. 1). Fundraising for non-ESG funds has continued to cool since peaking in 2021, whereas there was a slight uptick in ESG fundraising in 2024, albeit still $55bn below the 2022 peak. This recent uptick, although slight, demonstrates increased appetite among private market investors.


Fig. 1: Despite an overall decline in fundraising, ESG share and size increase slightly
Aggregate final close sizes of ESG and non-ESG funds

Fig. 1: Despite an overall decline in fundraising, ESG share and size increase slightly

Source: Preqin Pro. Data as of January 2025


Analysis of early returns of ESG-labeled funds shows robust internal rates of return (IRRs) in line with non-ESG counterparts, according to Preqin data (see links below). What’s more, ESG-labeled funds also offer lower performance variance, providing greater protection from downside risk. While it is still too early to definitively analyze the performance of ESG funds, returns thus far have bolstered investor confidence, leading to increased allocations.

Read the following articles for more information on ESG fundraising and performance in 2024:


The state of the energy transition in the EU and US

Europe has led the way in ESG regulations and continues to set the bar for transparency. Although there was a slight slowdown in the EU’s march toward its energy transition goals in 2024, with growth in solar power instalments in Europe falling to just 4%, the EU remains a pioneer in sustainable energy investment. Sustainable Finance Disclosure Regulation (SFDR) fund structures, specifically Article 9 funds, have seen capital increase over the past few years, according to Preqin data.

Beyond renewables, in the first half of 2024, the EU announced tariffs on Chinese electric vehicles (EVs), signaling a willingness to compromise EU targets to build out its domestic EV industry. Whether the EU moves forward with prioritizing the development of other domestic transition industries – such as batteries, renewables, or other clean tech – remains to be seen, but given the more volatile global trade market so far in 2025, the trade bloc may shift its focus inward.

Meanwhile, the US hit key milestones in its energy transition and provided a roadmap for how the buildout of renewables could continue under a new administration. Last year, renewables outpaced coal in net electricity generated for the first time up until November, according to EIA data.

Texas also became the leading renewable energy-producing state, surpassing California, and setting a new US record for solar energy generation in a single month. Texas provides a model for an approach including less regulation in the permitting process of renewable energy deployment, and could provide a template for the new administration’s policies. While this approach could be costly for biodiversity in particular, it demonstrates that private capital will continue to seek opportunities within renewables, even in states with anti-ESG policies.


The energy transition in China and emerging markets

China invested more than any other nation in energy transition investments in 2024. According to World Economic Forum estimates, China poured $675bn into transition technologies last year, leading the world in renewable investment. China has also taken the lead in EV production and adoption, placing it in a key position to be an exporter of clean technology to the rest of the world.

Emerging markets accelerated their transition to clean energy in 2024, driven by lowering manufacturing costs. Of the many developing countries expanding their solar capacity, Chile and India reached crucial milestones. Chile became the first country to generate 20% of its energy from solar and Rajasthan became the first Indian state to produce a third of its energy from solar for eight months consecutively in 2024.

Furthermore, data from the IEA shows EV’s share of the automobile market rose to 5% in emerging markets (China excluded) following a 100% increase in EV sales. As low-cost solar configurations and EVs become more prevalent, private capital investors could turn to emerging markets for new opportunities to expand their clean-tech portfolios.

For further market analysis on the energy transition, explore the following articles:


For more analysis of changes in the regulatory landscape, read our upcoming article, Seismic shifts in the regulatory environment.


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