Investment managers hold steady on responsible investment despite ESG scrutiny, but progress remains uneven

LCP’s latest Responsible Investment (RI) Manager Survey, published today, shows that despite the ongoing ESG debate, no investment managers reported giving RI related issues less consideration overall over the year to 30 June 2025.

While progress continued in climate scenario analysis, stewardship and governance, there remain material differences between managers in different regions.

Key areas showing mixed progress:

• Board oversight: ESG and stewardship oversight is now near universal (93%) at the board level. However, this has not translated into mandatory training, which remains low among board members (27%) compared with staff (81%).
• Climate scenario analysis: Scenario analysis is an important tool for climate risk management. Most managers now use quantitative and qualitative physical and transition risk analysis for at least some strategies, yet 14% still do not use climate scenario analysis at all.
• Transition expectations: The majority of managers are working towards net zero emissions for at least some of the assets they manage (66%), but at the same time, many believe that a disorderly transition to net zero is the most likely outcome. In particular, 20% more managers now expect a disorderly climate transition than in our 2024 survey – representing the vast majority (77%), up from 57% in 2024.
• Engagement: Of the managers working towards net zero for at least some of the assets they manage, net zero efforts are dominated by engagement with companies and other issuers to encourage them to transition (95%). Engagement with regulators and policymakers to promote system‑level decarbonisation is quite common among the subset of these managers based in the UK and Europe (64%), but remains limited among the North American managers.
• Collaboration: Participation in key industry ESG initiatives is broadly flat compared to our 2024 survey. Around a third of managers were unsure whether initiatives such as the Net Zero Asset Managers initiative and Climate Action 100+ will play a significant role in the investment industry over the next five years.
• Policy advocacy: Managers’ policy advocacy remains more focused on regulation and disclosures than on policies for the real economy and providing sustainable finance, meaning opportunities for real world impact through policy engagement are being missed.

With LCP’s RI experts expecting the political and regulatory backdrop to remain challenging over the year ahead, asset owners are urged to ensure they understand how their investment managers are approaching RI. This means going back to basics by engaging with them to encourage improvements in stewardship practices. It also involves meeting with other managers to find out what market-leading RI approaches look like and how they might align with the asset owner’s investment objectives.