Largest asset managers ‘off-track’ on net zero commitments

August 9th, 2023

Some of the world’s largest asset managers are far off track on meeting their 2050 net zero commitments, a study by data tool FinanceMap has found, with many failing to improve their climate performance over the past two years. 

FinanceMap’s ‘Asset Managers and Climate Change 2023’ report scored 45 of the world’s largest asset managers on three criteria: equity portfolio analysis, stewardship of investee companies and sustainable finance policy engagement. 

In some cases, not only had asset managers failed to improve climate performance, but they had reversed positive trends since the previous report in 2021, FinanceMap claimed. 

Additionally, of the equity fund portfolios assessed by FinanceMap, some 95% are misaligned with the International Energy Agency’s Net Zero Emissions by 2050 Scenario. 

Furthermore, the number of Stewardship A-List asset managers carrying out truly ambitious and effective climate stewardship practices relative to best practices has decreased by 45% since 2021. 

The report highlighted the ongoing divergence between US asset managers and their European competitors on top-line climate messaging as ‘anti-ESG’ trend has grown in the US. 

European asset managers top the chart when it comes to engagement with investee companies on climate with several A-rated asset managers including Legal & General Investment Management, BNP Paribas and UBS. Meanwhile, Natixis and Schroders received the highest Portfolio Paris Alignment scores. 

Daan Van Acker, program manager at FinanceMap, said: “The data shows that while they may talk the talk, most asset managers are not walking the walk when it comes to using their influence to drive real change in investee companies and sustainable finance policy. 

“Since FinanceMap’s 2021 report, asset managers’ portfolios are still misaligned with net zero targets, environmental stewardship efforts have stagnated, and asset managers are not supporting effective sustainable finance policy.” 

The report also found support for climate-positive shareholder resolutions had recorded a notable decline in 2022, with the average asset manager supporting just 50% of such resolutions, compared to 61% in 2021.