"Changes are afoot in the realm of sustainable investing, as fresh data from private market fundraisings indicates"
In the face of significant political pressure, particularly from Republican state finance officials in the U.S., most major asset managers remain committed to their climate and net-zero commitments. As of mid-2025, the global Net Zero Asset Managers initiative has expanded to 87 signatories managing $37 trillion, including the world's three largest asset managers—BlackRock, Vanguard, and State Street—who have pledged to reach net-zero emissions by 2050 with interim targets for 2030.
The asset managers are not only maintaining their commitments but also enhancing their environmental, social, and governance (ESG) policies and sustainability reporting. Surveys show that nearly all asset managers have ESG policies and dedicated teams, with an increasing number committing to stewardship codes and net-zero plans. They are also improving climate risk management, scenario modeling, and alignment with frameworks such as TCFD.
However, there is notable political pushback in the U.S. From Republican state officials. A coalition of 26 Republican state finance officials sent letters in July 2025 to 25 leading asset managers, urging them to renounce ESG and climate-related commitments and focus strictly on traditional fiduciary duties. They specifically pressured firms to stop incorporating net-zero commitments, natural capital frameworks, and EU sustainability reporting directives into standard investment strategies.
Despite this pressure and a broader U.S. "ESG backlash," asset managers have largely maintained or increased their climate ambition globally, although some have scaled back certain ESG objective settings due to regulatory scrutiny. This reflects a broader tension between maintaining climate commitments and navigating political/regulatory challenges in the U.S. market.
The report by PitchBook, a Morningstar company, advises against interpreting this negativity pessimistically, and suggests that managers are changing the way they communicate their climate offerings to clients, using phrases such as 'sustainability' or 'responsible investing' more often than 'ESG'.
The popularity of a manager's climate offerings is expected to depend on asset owners' conviction in the economics of their arguments. Over the past three years, specialist infrastructure funds, which invest in transition assets, raised over $100 bn. Additionally, some 166 private equity funds raised over $107 bn in commitments for climate solutions.
Despite the decline in the number of new GP signatory count for the PRI from 2019 to 2024, some of the world's largest asset managers were among the 400 institutional investors who signed up to the PRI in the early 2000s. Exits from the Net Zero Asset Manager Alliance (NZAM) occurred as a result of the backlash, but the report claims that allocator pressure has acted as an antidote to political pressure.
Texas Attorney General Ken Paxton led a group of Republican states that filed lawsuits against managers allegedly steering fossil fuel companies towards emissions reduction. The Big Three asset managers - BlackRock, State Street, and Vanguard - were among the targets of these lawsuits.
In summary, global asset managers are strengthening net-zero commitments and climate risk integration, while U.S. Republican state officials are actively challenging these commitments, demanding a focus solely on fiduciary duty without climate criteria. Despite political pressure, most asset managers continue to uphold climate policies and increase disclosure/reporting standards, though some adjustments occur due to regulatory and political contexts. Projects financed by these climate-related funds are vulnerable to policy change, particularly in asset classes such as infrastructure. The report concludes that the pressure has slowed the momentum behind asset managers' net zero commitments, but it has yet to hurt the popularity of its reasoning.
- Despite facing political pressure from Republican state finance officials in the U.S., many asset managers continue to strengthen their net-zero commitments and climate risk integration, enhancing their environmental, social, and governance (ESG) policies and sustainability reporting.
- The preference for climate-related offerings by asset owners is anticipated to depend on their conviction in the economics of the arguments, as specialist infrastructure funds, investing in transition assets, raised over $100 billion, while 166 private equity funds raised over $107 billion in commitments for climate solutions.
