Net-zero scrutiny must ‘go beyond’ industry pledges, institutional investors told

Written by Callum Conway

01/09/2025

Institutional investors and pension scheme trustees 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.

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