US asset owners increasingly demanding transparency around responsible investing

Written by Adam Cadle

19/02/2025

Over half of US institutional investors (58%) require or plan to require asset managers to provide portfolio-level exposure to financially material ESG risks, along with impact and thematic reporting, according to Cerulli.

Furthermore, 23% of asset owners require their asset managers to report on ESG-related engagement activities – a similar proportion (22%) will implement this requirement within the next two years.

“This demand for transparency reflects the broader push for responsible and accountable business practices across industries,” said Gloria Pais, analyst at Cerulli.

“Institutional investors want to ensure ESG considerations are not just a passing trend, but a fundamental part of the investment process. As such, asset managers must step up their reporting efforts to meet the expectations of asset owners and remain competitive in the evolving market,” she added.

The industry's efforts to standardise terminology and measurement frameworks for ESG reporting are ongoing, but significant hurdles remain. More than one-third of asset owners (38%) cite the difficulty of defining ESG boundaries as a key challenge, particularly when differentiating between ESG and impact investing.

As asset owners demand greater transparency and ESG accountability, those asset managers committed to helping their clients navigate responsible investing programs should invest in robust reporting systems that meet these expectations, Cerulli stated.

“Comprehensive, standardised reports on ESG risks and impacts can help asset managers demonstrate their commitment to responsible investing and attract more institutional clients,” Pais said.

“Furthermore, asset managers at the crossroads of evolving market demands should focus on integrating ESG considerations into their investment processes. These steps will help asset managers remain competitive and align with the values of their institutional clients,” she concluded.

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