European asset owners are doubling down on climate – managers might want to take note

Since the retreat of US- based managers from the Climate Action 100+ and Net Zero Asset Managers Initiative (NZAM), concerns have grown over whether systemic climate risks are truly being addressed. The pressure has now turned to asset owners to define what credible stewardship should look like, and some are responding with their mandates.

In February 2024, the high profile exits of JPMorgan, State Street, and BlackRock from CA100+ signalled that the days of blissfully signing up to net zero and stewardship alliances were over. In the years before that, these initiatives attracted hundreds of signatories. Over 325 organisations had signed up to NZAM, representing more than USD 57.5trn in assets under management. But as expectations from asset owners started to formalise and anti-ESG campaigns ramped up in the US, many managers were now left in an uncomfortable position. Either step up, or step back.

Amid this backdrop, asset owners are increasingly demanding genuine alignment and accountability from their managers, particularly on how they address systemic risks through credible stewardship practices. And the managers that don’t align with their investment philosophy may be at risk of losing mandates.

People’s Partnership was the first to strike terminating a £28bn mandate with State Street in February 2025, and appointed Amundi and Invesco in its place, citing stewardship as one of the deciding factors. The Danish pension fund Akademiker followed suit in March 2025, closing a DKK 3.2bn mandate with the U.S. investment firm. AkademikerPension’s investment director, Anders Schelde, specifically stated: "our asset managers don't have to think exactly like us — but they must be in line with our fundamental approach and the way we see the world”.

That same mindset is perfectly echoed by Pensioenfonds Zorg & Welzijn (PFZW), the Dutch pension fund that ended its €14bn mandate with BlackRock last week. PFSW had already divested from more than 310 oil & gas issuers in 2024 including Shell, BP, and TotalEnergies. Yet, they still expected their manager to engage and vote in line with their investment policy, even for companies that are no longer directly held.

One obvious example of this, is Shell, the oil and gas major for which PGGM (PFSW’s investment arm and fiduciary manager) was the engagement lead in the Climate Action 100+ initiative. This year’s Resolution 22, called for clearer disclosures on stranded assets risk tied to LNG, new gas investments, and how these align with Shell’s 2050 net zero goal. At the AGM, it was rejected by the US manager, but newly appointed Robeco, Schroders, and M&G Investments all supported it.

BlackRock does offer pass through voting to its institutional investors, allowing them to direct how their shares are voted. And while it does enhance client choice, it also fragments the manager’s stewardship approach by sending inconsistent signals to companies. When some clients support a climate resolution and their own investment manager vote against them, this undermines both the investor’s voice and the credibility of any coherent escalation framework.

Other investment firms such as L&G and State Street have also started to offer similar voting arrangements to their clients, but many investors will prefer to work with managers which share their stewardship philosophy from the outset, removing workaround solutions and ensuring engagement and voting are fully aligned at the organisational level.

Even on the other side of the Atlantic, NYC comptroller Brad Lander revealed that the five pension funds that form part of the New York City Employer Systems and collectively manage $300bn in assets, could soon divest from third-party managers if they fail to meet climate stewardship expectations. And CalSTRS, have also made climate a priority when selecting managers.

These public examples are just the tip of the iceberg. Industry efforts, such as the asset owner statement on climate stewardship (issued by a coalition of 26 investors representing more than $1.5trn in assets), also demonstrate the collective pressure now building on managers to develop credible stewardship strategies that address climate risks.

Of course, for most investors one challenge remains. How do you assess what good looks like?

In my conversations with asset owners, “Trust”, is one word that keeps coming back. “Transparency” is another.

Glossy stewardship reports and cherry-picked engagement case studies are no longer enough. What responsible investment teams want is a clear consistent view of whether their managers are delivering outcomes. They want to know what’s working, what isn’t, and they want the tools to hold them accountable.

In the UK, the FCA’s Vote Reporting Group has worked to standardise how managers disclose their voting practices to ensure investors access comparable and complete data. Some investors are also updating their Investment Management Agreements (IMA’s) to include explicit engagement reporting requirements.

Perhaps, we’re not in a stewardship recession after all. European asset owners aren’t walking away. On the contrary, they’re doubling down, demanding transparency and alignment. According to a recent analyst note by JP Morgan, this could offer a $11.7trn opportunity for managers maintaining a strong position on climate.

But don’t expect US managers to stand down. They will push back. Let’s hope this is aimed at the regressive political headwinds at home, not the rising expectations of their clients abroad.