Deepening Discrepancy in Climate Policy Between U.S. and Europe
In a recent report by ShareAction, US asset managers have been criticised for their lacklustre approach to climate resilience and biodiversity investment, lagging behind their European counterparts. The report, titled "Point of No Returns 2025," assesses the 76 largest global asset managers against 20 standards of responsible investment, including governance, stewardship, climate, biodiversity, and social impacts.
The world's largest asset managers, including BlackRock, Vanguard, State Street, and Fidelity, have collectively earned failing grades and met just 4 out of 80 possible key standards across climate, biodiversity, and social issues. In contrast, European asset managers, such as Aviva Investors, Robeco, and Legal & General, have been singled out for their efforts to encourage companies to disclose location-level biodiversity risks and impacts.
The report highlights a combination of weaker regulatory impetus, less robust investor demand for ESG (Environmental, Social, and Governance) integration, and different strategic priorities within the US asset management industry as key factors contributing to this gap. European asset managers tend to integrate climate resilience and biodiversity more centrally in their investment processes, supported by strategic capital investments and sectoral focuses aligned with energy transition, infrastructure, and industrial automation.
Europe dominates the global sustainable investment space, holding about 85% of global sustainable fund assets, with strong inflows recovering to $8.6 billion in Q2 2025. In contrast, the US follows with only about 10% of assets under sustainable management and less enthusiastic inflows, reflecting a slower adoption and integration of responsible investment principles by US asset managers.
The report warns that the overall pace of change is stagnating, with little progress made since 2023, and in some cases, there are signs of regression. However, there is growing pressure from asset owners on managers to improve stewardship alignment, with the New York City comptroller warning managers last month to step up their climate ambitions or risk divestment.
Despite this, few managers now escalate engagements or restrict investment in controversial industries compared to prior years. European managers are more likely to impose fossil fuel investment restrictions, engage companies on biodiversity risks, and produce climate transition plans. Engagement strategies are widespread in theory, but only one-third of firms take concrete action when companies fail to improve their practices.
In contrast, just one Asian or North American firm received a grade above D. The Dutch firm Robeco topped the table for the third consecutive time, with almost half of the European asset managers assessed receiving A to C grades. BlackRock, Vanguard, and other large US asset managers collectively held over $4.5bn in new fossil fuel bond issuances between 2023 and mid-2024.
The voting records of these US managers suggest minimal support for environmental resolutions at shareholder meetings. Some US managers, such as BlackRock and State Street, have launched proxy voting services, allowing investors in pooled funds to vote on individual share holdings. However, this has not translated into significant support for environmental resolutions.
In conclusion, the report underscores the need for US asset managers to accelerate their efforts in responsible investment, particularly in the areas of climate resilience and biodiversity. European managers significantly outperform their North American and Asian peers across all environmental themes, including climate change and biodiversity. The stakes are high, as the failure to address these issues could have far-reaching consequences for the global economy and the environment.
- The lacklustre approach to climate resilience and biodiversity investment by US asset managers, as highlighted in the "Point of No Returns 2025" report, raises concerns about their capacity to effectively address environmental issues, a crucial aspect of environmental science.
- The report indicates that European asset managers, such as Aviva Investors, Robeco, and Legal & General, are demonstrating leadership in the finance sector by encouraging companies to disclose location-level biodiversity risks and impacts, a strategy that aligns closely with the principles of ESG and environmental-science.
- Despite the growing pressure from asset owners on managers to improve stewardship alignment and address climate change, some large US asset managers, including BlackRock and Vanguard, continue to invest in fossil fuel bond issuances, a move that contradicts general-news trends pointing towards a shift towards renewable energy sources and climate-change mitigation.
