US-Europe manager divergence on climate widens

While European managers are making moderate progress on responsible investment, many of their US counterparts are significantly lagging, with minimal policies in place to curb environmental harm or steer portfolios toward climate resilience, according to ShareAction’s Point of No Returns 2025 report, published today.

The report, now in its fifth year, measures the 76 largest managers against 20 standards of responsible investment, ranging from governance, stewardship, climate, biodiversity, and social impacts.

This comes amid growing pressures from asset owners on managers to step up their game on stewardship alignment. The New York City comptroller warned managers last month to step up their climate ambitions or risk divestment.

Earlier, UK master trust The People’s Partnership and Danish Akademiker Pension significantly scaled back their mandates with State Street, citing concerns over stewardship alignment.

Regulation drives UK and European lead on climate

European managers were found to significantly outperform their North American and Asian peers across all environmental themes, including climate change and biodiversity. Almost half of the European asset managers assessed received A to C grades, with the Dutch firm Robeco topping the table for the third consecutive time.

In contrast, just one Asian or North American firm received a grade above D. According to the report, this divergence appears linked to stronger regulatory frameworks in Europe, such as the EU’s Sustainable Finance Disclosure Regulation and the UK’s Stewardship Code, which have driven higher disclosure standards and more robust investment practices.

While still far from ideal, European managers were more likely to impose fossil fuel investment restrictions, engage companies on biodiversity risks, and produce climate transition plans.

For instance, SEB Asset Management, based in Sweden, has set timebound, absolute emissions reduction targets covering more than 50% of its assets, one of only four firms globally to meet this benchmark.

US managers scale down ambitions on climate

In stark contrast, the world’s largest asset managers, BlackRock, Vanguard, State Street, and Fidelity, earned failing grades and collectively met just 4 out of 80 possible key standards across climate, biodiversity, and social issues.

None of them achieved a single climate-related standard, such as setting meaningful emissions targets or restricting investment in fossil fuel expansion. These four US firms manage over a third of all assets included in the survey, giving their inaction outsized global impact.

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Despite making public climate commitments, these firms continue to invest heavily in new fossil fuel issuances. The report highlights that BlackRock, Vanguard, and others collectively held over $4.5bn in new fossil fuel bonds issued between 2023 and mid-2024. Moreover, their voting records at shareholder meetings suggest minimal support for environmental resolutions.

Being pulled into two directions, with some US investors advocating a more conservative stance, managers such as BlackRock or State Street have in recent years launched proxy voting services, allowing investors in pooled funds to vote on individual share holdings.

However, many managers have simultaneously adopted a more conservative voting stance and scaled back their backing for climate resolutions, as Share Action’s latest voting matters report shows.

Biodiversity still ignored

Biodiversity emerged as the weakest area overall, with more than half of asset managers, especially those from the US and Asia, failing to meet even a single standard. Despite growing scientific consensus that biodiversity loss is both a driver and consequence of climate change, most managers lacked sector-specific policies for high-impact industries like mining, chemicals, and agriculture. Just 5% of managers restrict investment in companies operating in globally important biodiversity areas.

Again, European firms were more likely to demonstrate leadership. Aviva Investors, Robeco, and Legal & General were singled out for encouraging companies to disclose location-level biodiversity risks and impacts, a critical first step in preventing ecological harm.

Rhetoric outpaces action

Although most firms claim to recognise the risks of climate change and nature loss, the report finds a wide gap between rhetoric and action. While 80% of firms have set some kind of net-zero ambition, fewer than one in five have set credible interim targets.

Engagement strategies are widespread in theory, but only one-third of firms take concrete action, such as divestment or shareholder resolutions, when companies fail to improve their practices.

The report warns that the overall pace of change is stagnating, with little progress made since 2023. In some cases, there are signs of regression, as fewer managers now escalate engagements or restrict investment in controversial industries compared to prior years.