Pension scheme trustees and institutional investors must look beyond industry pledges when assessing whether asset managers are “genuinely committed” to net zero, LCP has warned.

The consultancy stressed that while initiatives such as the Net Zero Asset Managers Initiative (NZAMI) have been a useful indicator of intent, providing targets and regular reporting, recent changes and the ongoing review of NZAMI highlighted the need for trustees to scrutinise their managers’ climate credentials more closely and directly.

LCP argued that managers who are 'best in class' should be able to explain how they are addressing data gaps, particularly in alternatives and illiquid assets, and how they are balancing decarbonisation goals with issues such as livelihoods, health, and the environment.

With this in mind, the firm set out five questions to help trustees understand how serious their managers are about decarbonisation, covering whether a manager has set a net zero target, whether interim milestones are in place, how vocal they are on net-zero engagement, and whether they have considered the wider social implications of the climate transition.

LCP associate consultant, Charlotte Dawkins, described net-zero pledges as a “helpful starting point”, but warned they did not offer “the full picture”.

“To really understand a manager’s commitment to net zero, investors need to look beyond the labels and assess their practices, from setting targets to demonstrating progress to engaging with companies,” she continued.

“It is only by asking the right questions that investors can gain real confidence in their managers’ climate credentials,” added Dawkins.

Her comments follow a period of growing debate about the effectiveness of industry initiatives, after several large firms, including BlackRock, scaled back their involvement in NZAMI.

Despite this, three-quarters of pension schemes have now adopted net-zero targets; however, concerns remain over whether these commitments are being backed up with credible short- and medium-term plans.

LCP’s call also reflects wider pressure from pension providers, who have recently urged asset managers to strengthen climate stewardship strategies to ensure progress towards net zero is not only announced but delivered in practice.

Echoing this, The Pensions Regulator (TPR) called on trustees to move beyond compliance and demonstrate leadership on climate and nature-related risks, as it steps up expectations on investment governance.

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