Investment managers are holding steady on responsible investment (RI) commitments, as no manager reported giving RI-related issues less consideration over the year to 30 June 2025, despite concerns the industry was retreating on these issues, according to LCP.

The consultancy’s latest RI Manager Survey showed continued progress on climate scenario analysis, stewardship, and governance, although material differences between managers in different regions remained.

LCP urged asset owners to ensure they understood how their investment managers were approaching RI, amid expectations that the political and regulatory backdrop would remain challenging this year.

It said this meant going back to basics by engaging with managers to call for improvements in stewardship practices, and meeting with other managers to find out what strong RI approaches looked like and how they could align with the asset owner’s investment objectives.

Environmental, social, and governance (ESG) and stewardship oversight was being conducted by 93 per cent of investment management boards.

However, this had not translated into mandatory training, which remained low among board members (27 per cent) compared with staff (81 per cent).

Scenario analysis was highlighted as an important tool for climate risk management, with most managers using quantitative and qualitative physical transition risk analysis, although 14 per cent did not use any climate scenario analysis at all.

Two thirds (66 per cent) of investment managers were working towards net-zero emissions for at least some of the assets they manage, but many still believed a disorderly transition to net zero was the most likely outcome.

LCP highlighted a 20 percentage point increase in managers expecting a disorderly climate transition compared to its 2024 study, rising to 77 per cent.

Among managers working towards net zero, 95 per cent were engaging with companies and other issuers to encourage them to transition.

Engagement with regulators and policymakers to promote system-level decarbonisation was commonplace among managers based in the UK and Europe (64 per cent), but remained ‘limited’ among North American managers.

Investment managers’ participation in industry ESG initiatives remained broadly the same as 2024, with around a third unsure whether initiatives would play a significant role in the investment industry over the next five years.

LCP also found that managers’ policy advocacy remained more focused on regulation and disclosures than on policies for the real economy and providing sustainable finance, which the consultancy argued meant opportunities for real-world impact through policy engagement were being missed.

“The results suggest the industry is adapting rather than retreating on responsible investment, which is encouraging in the current climate,” commented LCP senior investment consultant, Laetitia Anstee-Parry.

“Manager approaches still vary, so asset owners need to understand how their managers invest and engage with them to ensure alignment with their own objectives.”

LCP principal, Sapna Patel, added: “Addressing systemic financially material risks requires action on many levels, including companies, industries and policymakers.

“Investment managers have an important role to play through wider conversations that influence how these risks are addressed, opening up opportunities for real-world change.”

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