This comes following the withdrawal of managers from, and ultimate cessation of, the Net Zero Asset Managers Initiative, largely driven by litigation threat against US based managers.
Alex Quant, Head of ESG Research at XPS Group said: “We are seeing a shift in responsibility onto asset owners, who are now expected to instruct asset managers as to their preferences around sustainability, particularly where asset managers with US exposure are less able to take any sort of house view on things like climate change. However, our sense is that the views of asset owners, particularly institutional investors, are not changing, where it’s more common for investors in UK and Europe to have set their own Net Zero targets, for example. Therefore, the step back from some Asset Managers may lead to more rotation into investment managers which better align to the views and policies of investors.
Ultimately, the extent to which ESG sentiment shifts in European markets will depend on government action. The experience of US-based managers emphasises the importance of clear, top-down regulatory requirements for companies and investment markets. To avoid similar pushback in Europe, governments must continue to make progress and take action to support their national commitments.”
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