In this week’s edition of Economy and Society:
- China launches first corporate climate disclosure standards
- Japan maintains ESG investment despite global decline
- EU moves to tighten rules on plastic imports
- Dutch pension fund ends BlackRock mandate after ESG review
- Global ESG ETF assets reach $799 billion in 2025
Around the world
China launches first corporate climate disclosure standards
What’s the story?
On Jan. 5, China's Ministry of Finance released the country’s first national corporate climate report framework, titled Corporate Sustainable Disclosure Standard No. 1 – Climate (Trial). The standard sets voluntary guidelines for companies to disclose climate-related information and is intended to align with international reporting frameworks.
The framework will start on a voluntary, trial basis, with future plans to broaden its scope and require mandatory reporting. The ministry said that the guidelines will
“establish a transparent, comparable, and reliable climate information disclosure system, strengthen the supply of standards to support green and low-carbon development, help guide market expectations, regulate corporate behavior, and scientifically assess the progress of transformation, and provide key policy tools and institutional infrastructure for transforming the “dual carbon” target from a national macro strategy to corporate micro actions.”
Why does it matter?
The new framework establishes a national structure for climate-related corporate disclosures in the world’s second-largest economy. Alignment with global standards would make Chinese companies’ disclosures more comparable with disclosures from companies operating in other markets.
The ministry also said standardized disclosures would reduce inconsistent reporting and help guide capital toward low-carbon projects, giving the framework implications for financial markets as well as industrial policy.
What’s the background?
The climate disclosure standard is intended to align with international reporting frameworks developed under the International Financial Reporting Standards Foundation, which oversees global accounting and sustainability reporting initiatives. Within that structure, the International Sustainability Standards Board develops climate and sustainability disclosure standards for companies and regulators in multiple jurisdictions.
Chinese officials said the new framework follows the overall structure of the board’s climate disclosure model, while incorporating China-specific requirements. The Ministry of Finance also indicated that industry-specific guidance is under development for sectors including power, steel, coal, petroleum, cement, and automobiles, with future implementation expanding from voluntary to mandatory reporting.
Japan maintains ESG investment despite global decline
What’s the story?
Japanese corporations and industry groups continue to promote environmental, social, and governance (ESG) investment as a foundation for long-term growth, even as investor demand remains subdued. Morningstar Japan reported that investors withdrew a net ¥125.8 billion from ESG funds between July and September 2025. That period marked the 13th consecutive quarter of net withdrawals from ESG-related funds in Japan, while corporations continued to advocate for sustainability initiatives.
Why does it matter?
Morningstar Japan’s data illustrate sustained investor skepticism toward ESG-branded funds, despite ongoing corporate and policy support. Prolonged outflows can affect how asset managers structure ESG products and communicate performance. Japan’s experience also provides a counterpoint to policy pullbacks in other markets, suggesting that corporate-led sustainability efforts can persist even without strong near-term capital inflows.
What’s the background?
Global ESG funds recorded net outflows of about $55 billion in Q3 2025, according to Morningstar. The quarter marked the 12th consecutive period of withdrawals for U.S. sustainable funds and continued declines across Europe, even as ESG funds continued to hold large amounts of assets under management worldwide. Fixed-income ESG funds were the only segment to attract new investment.
EU moves to tighten rules on plastic imports
What’s the story?
On Dec. 24, the European Commission announced a set of pilot actions on plastics recycling that would create common rules across EU member states. The measures include:
- New EU-wide criteria for determining when plastic waste qualifies as recycled material.
- Updated requirements for calculating and reporting recycled content in plastic bottles.
- New customs classifications separating recycled plastics from new plastics.
- Expanded monitoring of plastics imports to inform future trade measures.
The measures aim to support the EU plastics recycling market and prepare for additional circular economy legislation expected in 2026.
Why does it matter?
The EU has set targets to increase recycled content and reduce reliance on virgin plastics, but growth in recycling capacity slowed sharply in recent years. The Commission reported that EU plastics recycling capacity growth fell from 17% in 2021 to 6% in 2023, while recycled materials accounted for just 12.2% of plastics used in 2024.
The EU says it is implementing tighter trade monitoring and common recycling rules to address market imbalances and standardize plastics recycling practices.
What’s the background?
The Commission plans to build on these measures through a proposed Circular Economy Act expected in 2026. That legislation is expected to address waste markets, recycled raw materials, and extended producer responsibility systems. The EU has already imposed anti-dumping duties on certain plastic imports, including Chinese PET plastics, citing harm to domestic producers.
On Wall Street and in the private sector
Dutch pension fund ends BlackRock mandate after ESG review
What’s the story?
At the end of 2025, Netherlands‑based pension manager PME Pensioenfonds terminated its €5 billion equity mandate with BlackRock following a review of external asset managers under its ESG framework. PME said that although BlackRock had delivered high‑quality services for many years, its investment approach no longer aligned with the fund’s Portfolio of Tomorrow sustainability principles.
Earlier this year, another Dutch pension fund, PFZW, pulled roughly €14 billion from BlackRock amid similar concerns about alignment with sustainability goals.
Why does it matter?
The decision highlights growing tension between asset owners and global managers over ESG integration. BlackRock manages roughly $13.5 trillion in assets globally, but has adjusted its ESG approach following political and shareholder pushback, particularly in the United States. Some European pension funds have viewed those changes as misaligned with their sustainability criteria. The loss of multiple large mandates may affect BlackRock’s positioning among institutional investors that continue to prioritize ESG integration.
What’s the background?
BlackRock, previously an ESG advocate, has reduced emphasis on ESG following political and shareholder pressures, prompting some clients to reassess its alignment with sustainability criteria. In 2025, BlackRock left the Net Zero Asset Managers Initiative, and Fink’s latest annual letter omitted ESG topics.
Earlier in the year, the Sierra Club pulled its investments from BlackRock, while the Texas Comptroller removed the firm from the state’s fossil-fuel boycott list. BlackRock also partnered with Exxon to form a coalition aimed at overhauling carbon accounting.
Global ESG ETF assets reach $799 billion in 2025
What’s the story?
Global assets in ESG exchange-traded funds (ETFs) reached $799 billion at the end of November 2025, with year-to-date inflows of nearly $49 billion, a 25% increase from 2024, according to ETFGI, a research firm that tracks global ETF trends. ESG ETFs are investment funds that trade on stock exchanges like a stock and invest in companies based on environmental, social, and governance criteria.
Despite criticism from some U.S. lawmakers and a political backlash against ESG, BlackRock remained the largest ESG ETF manager, with $269 billion in assets, roughly one-third of the global market. Other top managers included Amundi ETF with $109 billion and UBS ETFs with $56 billion. Broad ESG strategies captured most inflows, while narrowly targeted funds such as clean energy and green bonds also attracted money.
Why does it matter?
The data show that investor demand for ESG funds remains strong, even amid political controversy. Sustained inflows support asset managers in continuing to offer ESG-focused products and provide insight into how investors, particularly younger and long-term clients, are integrating sustainability into their portfolios.
What’s the background?
While ESG ETFs reached a record $799 billion at the end of November 2025, other ESG funds, including mutual funds, saw sustained outflows. Morningstar reported $55 billion in outflows from global ESG funds in Q3 2025, marking the 12th consecutive quarter of withdrawals in the U.S. and declines across Europe.
Research on broader fund markets shows that investors have increasingly shifted capital from mutual funds to ETFs in recent years. In that context, the divergence between ESG ETF inflows and ESG mutual fund outflows may reflect differences in fund structure, costs, and tax treatment rather than a uniform change in investor views on sustainability.