Increasing disagreements between American and European leaders regarding climate change policies intensify
In a striking revelation, a recent report suggests that US asset managers are trailing behind their European counterparts in responsible investment, particularly in climate resilience and environmental impact.
The report, which measures the 76 largest managers against 20 standards of responsible investment, including governance, stewardship, climate, biodiversity, and social impacts, paints a concerning picture. The world's largest asset managers, BlackRock, Vanguard, State Street, and Fidelity, collectively met just 4 out of 80 possible key standards across climate, biodiversity, and social issues.
The overall pace of change in responsible investment is stagnating, with little progress made since 2023. The voting records of BlackRock, Vanguard, State Street, and others suggest minimal support for environmental resolutions at shareholder meetings. Despite this, only one-third of firms take concrete action, such as divestment or shareholder resolutions, when companies fail to improve their practices.
Biodiversity is 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. In stark contrast, European managers like Aviva Investors, Robeco, and Legal & General are encouraging companies to disclose location-level biodiversity risks and impacts.
The primary reason for this disparity appears to be political and regulatory differences. Specifically, US anti-climate and anti-ESG policies have made asset managers hesitant to fully embrace ESG strategies, whereas European investors benefit from clearer regulatory frameworks, including the European Securities and Markets Authority’s (ESMA) fund naming guidelines that help limit greenwashing and increase investor confidence in sustainable funds.
Regulatory clarity and enforcement in Europe also play a significant role. The ESMA guidelines require funds to adopt consistent sustainability-related naming conventions, significantly improving transparency and credibility. This has led to a surge in renaming activity in Europe, with nearly 600 funds changing ESG-related names over 18 months, boosting investor comfort and fund flows into sustainable strategies.
Investor demand and flows also favour Europe. Despite the US asset management industry leading globally in overall innovation and scale, Europe saw $8.6 billion in inflows into sustainable funds in Q2 2025, a strong recovery, while US flows have been more cautious.
Market and product innovation in Europe have also been more aggressive, with European managers moving more quickly on sustainability product offerings, supported by more unified regulatory standards that encourage responsible investment.
Some US managers, such as BlackRock and State Street, have scaled back their backing for climate resolutions. Fewer than one in five firms have set credible interim targets towards their net-zero ambitions. In some cases, there are signs of regression, as fewer managers now escalate engagements or restrict investment in controversial industries compared to prior years.
The New York City comptroller has warned managers to step up their climate ambitions or risk divestment. However, none of the four US firms achieving a single climate-related standard manage over a third of all assets included in the survey, giving their inaction outsized global impact.
In contrast, European managers are more likely to impose fossil fuel investment restrictions, engage companies on biodiversity risks, and produce climate transition plans. Swedish-based SEB Asset Management, for example, has set timebound, absolute emissions reduction targets covering more than 50% of its assets, one of only four firms globally to meet this benchmark.
The report, titled Point of No Returns 2025, indicates that European managers are making moderate progress on responsible investment compared to their US counterparts. 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.
As the world grapples with the urgent need for action on climate change and environmental protection, the findings of this report underscore the need for more robust ESG policies in the US to close the gap with European leaders in responsible investment.
[1] ESMA fund naming guidelines
[2] Point of No Returns 2025 report
[3] Global Sustainable Investment Alliance
- The European Securities and Markets Authority (ESMA) has implemented fund naming guidelines that aim to limit greenwashing and increase investor confidence in sustainable funds, a practice absent in the United States.
- The report titled Point of No Returns 2025 indicates that while European asset managers are making moderate progress in responsible investment, US asset managers are lagging behind, particularly in climate resilience and environmental impact.
- The Global Sustainable Investment Alliance has emphasized the need for more robust Environmental, Social, and Governance (ESG) policies in the US to close the gap with European leaders in environmental-science-related investments, especially as they relate to climate-change and finance in both business and politics.
