After the underperformance of ESG investments in the bear market of 2022, ESG detractors appeared to ignore the latest regulatory and policy overdrive, aiming to improve existing standards and elevate ESG as a compensated risk factor in investment portfolios. These regulatory and policy measures are likely to have a significant impact on investors‘ asset allocation and use of passive vehicles. Xtrackers discusses key takeaways of the CREATE Passive Investing Report 2024 “Are ESG Regulatory and Policy Measures Driving Asset Allocation?” and aims to assess global pension funds' perspective on the increasing emergence of ESG as a compensated risk factor, providing practical insights into how investors are reacting to an increasing number of ESG-related regulatory initiatives via their asset allocations.