Asset managers’ exits from investor-led initiatives such as climate initiatives the Net Zero Asset Managers initiative and Climate Action 100+ fragments collaboration has created a transparency gap.
Arguments to leave have included legal and regulatory pressures and changes, evolving client expectations, fiduciary duty and risk, flexibility, client-centric engagement, and preserving independence. The NZAM even suspended its operations in January 2025 following BlackRock’s departure from the coalition.
Since then, signatory asset managers have continued their climate engagement independently, and reframed their ESG communications.
In the absence of a formal collaboration, how can asset managers maintain influence and communicate about it?
In-house stewardship
A new Sustainable Investment Survey by UK pensions advisor ISIO shows that stewardship’s importance has increased, with rising capacity within in-house stewardship teams. Highlighting strengthened capacity demonstrates a robust internal commitment to ESG principles, even as external collaborative efforts face fragmentation.
Challenge with explicit stewardship priorities
The ISIO survey shows that while firms have priorities, the explicitness of these priorities or their alignment with engagement remains a challenge.
Explicitly stating priorities enables to communicate more effectively to demonstrate how engagement activities are strategically aligned to drive change on critical systemic issues.
Legal and regulatory restrictions
Legal challenges, particularly in the U.S. around Diversity, Equity and Inclusion, have restricted ESG engagement activities for asset managers with U.S. exposure, the ISIO survey shows.
Explaining how your organization navigates these constraints while striving to maintain influence and achieve ESG objectives through alternative or adapted engagement methodologies helps manage client expectations and demonstrates your proactive response to regulatory shifts.
Demand for transparency and reporting challenges
The demand for transparency is increasing, which brings the issue of reporting on sustainability metrics.
On that front, the survey shows that reporting on social and nature metrics is lagging.
For organizations prioritizing efforts to enhance the comprehensiveness of reporting across all ESG dimensions, detailing the steps being taken to close data gaps does provide transparency.
ESG data quality and coverage limitations
The ISIO survey indicates that the lack of ESG data quality and coverage remains a challenge that is particularly true for private markets and certain credit sub-asset classes such as asset-backed securities.
Organizations can be forthcoming about this type of challenge in their communications. By acknowledging these limitations, you can build trust and demonstrate a realistic, yet committed, approach to improving data acquisition and integration, which is crucial for robust reporting and effective stewardship.
Product labelling and broader ESG integration
Stricter anti-greenwashing regulations and complex labelling requirements have a direct impact on communications around product offerings. The ISIO survey points out that some managers are choosing to “forgo formal labels in favor of broader ESG integrations”.
In Europe, where sustainable funds represent 19% of fund universe a record 600 funds were renamed in Q2 to comply with regulations.
Your communications strategy can clearly articulate your approach, whether it’s through specific product labels or through a firm-wide deep integration of ESG, ensuring clients understand the true extent of your sustainable investment commitment.
Reaffirming the value of collaboration
Despite the recent exits from prominent initiatives, you can continue to communicate your commitment to effective collaboration as a “powerful tool for change” and “best practice”.
“Effective collaboration provides a platform for scale and influence in driving positive change and represents best practice.”
While acknowledging the legal pressures influencing participation, your organisation can highlight how you seek avenues for collective influence where feasible and impactful, even if through different forms of engagement or smaller, focused consortia.
By adopting these communication strategies, you can provide clarity, build trust, and demonstrate commitment to sustainable investment, even amidst a complex and rapidly changing environment.
