Environmental, social, and governance (ESG) progress among fiduciary managers (FM) stalled in 2025, with the proportion of FMs rated ‘green’ by XPS Group falling by 17 percentage points year-on-year.

XPS’s latest survey of the UK fiduciary management market highlighted a growing disconnect between sustainability rhetoric and reality.

The consultancy noted that while sustainability was widely referenced in FM’s approaches, implementation remained inconsistent across the market.

Just 21 per cent of fiduciary managers were rated as ‘green’ by XPS in 2025, down from 38 per cent in 2024.

Furthermore, signatories to the Net Zero Asset Managers Initiative declined to 36 per cent.

Although more than half (57 per cent) of FMs influenced voting activities in 2025, escalation from engagement to divestment remained inconsistent.

Over a third (36 per cent) of FMs did not include all ESG ratings for underlying funds in standard client reporting.

XPS stated that climate change practices had seen the greatest decline, with fewer managers showing sufficient assessment of climate risks or preparation of portfolios for the transition to a low-carbon economy.

It warned that this gap between talk and action increased reputational and regulatory risks for pension schemes, relying on FMs to deliver on net-zero commitments.

The consultancy urged trustees to look beyond headline targets and ask for clear evidence of how portfolios were being stress tested and adjusted in practice.

While many FMs said they were consistently engaging with companies as part of their stewardship practices, few demonstrated a structured escalation process and measurable outcomes were rare, according to the study.

Trustees were encouraged to push for greater transparency on how engagement was escalated, and insist on clarity around these routes and voting influence.

XPS also warned that reporting quality remained a primary concern, as while leading FMs offered dashboard-led, scheme-specific ESG reporting, quality varied across the market.

The firm called on trustees to move beyond high-level policy statements and look to actively challenge FMs to demonstrate ESG integration in practice.

“The gap between ESG ambition and execution is widening,” commented XPS Group head of FM research, Fraser Weir.

“Trustees can no longer rely on statements alone - they need evidence of integration, escalation, and impact. Oversight is critical to protect schemes from regulatory and reputational risk."

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