There’s one ESG fund category that’s outgrowing most others in the US, and it’s dedicated to investing in big CO2 emitters with a view to cleaning them up.

Assets in so-called climate transition funds surged 304% to $9.3 billion in the 18-month period ended in June, Morningstar Inc. said in a report on Wednesday.

The fresh figures add some nuance to speculation around the extent to which political backlash against ESG is hobbling the investment strategy in the US. Against a backdrop of high energy prices, a selloff in green stocks and GOP attacks on ESG, assets in US climate funds overall still managed to hit a record $32 billion, according to Morningstar.

But aside from climate transition funds, attracting new money for strategies such as low carbon, green bonds, climate solutions and clean tech “hasn’t been easy” for US fund managers, Morningstar said. And climate as an overall fund class grew only 4% in the period, it said.

Europe remains the biggest market for new climate funds, accounting for 84% of global assets. China’s market share is 8%, while the US stands at 6%, Morningstar said. Globally, assets in climate funds rose by almost a third in the past 18 months, reaching $534 billion in June, the researcher estimates.

The narrative around investing to reflect environmental, social and governance risks continues to be complicated by controversy and disagreement, fanned principally by US politics and the energy crisis that followed the Ukraine war. A recent Bloomberg survey of financial market participants found that two-thirds hate talking about ESG to clients, but acknowledge there’s no way around the investment strategy.

Against that backdrop, more ESG funds have been launched than liquidated. Globally, 90 ESG funds were closed so far this year, compared with 253 that were opened. Even in the US, 25 more ESG funds were created than were shuttered, according to data provided by Morningstar Direct.

Goldman Sachs Group Inc.’s asset management unit opened this year’s biggest climate fund to hit the European market, with a $2.4 billion green bond strategy, Morningstar said.

“As with the broader fixed-income universe, green bond investors have been switching to longer-duration exposures this year, with the expectation that the current monetary tightening cycle is inching toward the end as inflation is reaching its peak,” Morningstar said.

Meanwhile, it remains unclear how much good ESG funds are doing. When it comes to climate funds, Morningstar notes that none of the most widely held companies in the portfolios it analyzed is aligned with the goal of limiting global heating to the critical threshold of 1.5C.

“The most popular stocks in broad market climate portfolios are more misaligned than those in portfolios that target climate solutions,” Morningstar said, with implied temperature rises of between 3.3C and 2.4C.

According to Morningstar unit Sustainalytics, 87% of more than 5,000 publicly traded companies with global operations are on a pathway to at least 2.1C of warming.

Morningstar said it identified more than 1,400 open-end and exchange-traded funds with a climate-related mandate as of June, up from fewer than 200 in 2018.