Asset owners urged to embed fossil fuel phaseouts into mandates as managers increase exposure
Asset owners have been urged to make fossil fuel phaseouts a core requirement in manager selection as asset managers continue to increase their exposure to the fossil fuel industry
The world’s largest US and European asset managers increased their exposure to the fossil fuel industry in 2025, collectively holding around $17bn in new bonds issued by fossil fuel developers, according to a new report.
The research, published by Reclaim Finance and endorsed by AnsvarligFremtid, Fossielvrij NL, Sierra Club, SOS UK and Urgewald, examines the asset allocation and stewardship efforts of the 30 largest asset managers in Europe and the US, sketching a gloomy picture.
The report highlights that BlackRock and Amundi in particular have increased their exposure to recently issued bonds by fossil fuel companies. BlackRock was found to hold $2.6bn in newly issued bonds from oil and gas developers, up from $1.7bn last year. Amundi held $343mn in newly issued bonds from oil and gas developers, compared with $138mn last year.
In contrast, researchers welcomed the fact that Ostrum Asset Management was found not to hold any recently issued bonds from fossil fuel developers, while BNP Paribas AM has committed not to purchase any bonds issued by oil and gas producers on the primary market.
The report also finds that most managers did not use their votes to oppose fossil fuel companies’ expansion plans, with an average of 81% of votes cast in support of company boards of directors, including votes to re-elect directors responsible for expansion strategies. Union Investment, however, stood out by voting against fossil fuel expansion strategies at almost all AGMs of fossil fuel companies.
The findings underline the crucial role of asset owners in pushing asset managers to take climate change seriously, argues Agathe Masson, sustainable investment campaigner at Reclaim Finance. Welcoming recent moves by major pension funds such as PFZW, which announced mandate changes this year, she urged other asset owners to follow their lead.
“Pension funds and other asset owners can no longer ignore the climate-related financial risks of working with asset managers that are investing in fossil fuel expansion. They have a fiduciary duty to act in the interests of their clients and beneficiaries, yet most seem willing to turn a blind eye.”
The report recommends that pension funds and other asset owners impose deadlines on fossil fuel phaseouts for asset managers and, if expectations are not met, consider changing managers.
Campaigners now plan to engage with major European pension funds, most notably ABP in the Netherlands, Nest in the UK and PFA in Denmark, to push for a more explicit phaseout of fossil fuels.
The report’s release comes weeks after pension fund members in Canada opted to take the Canada Pension Plan Investment Board to court over continued investments in the fossil fuel industry, arguing that this breaches the fund’s fiduciary duty.
In the UK, politicians are currently weighing an amendment to the upcoming Pensions Bill that could see “system level considerations”, including climate change, added to the statutory guidance on fiduciary duty.
