Differences in climate policies between the USA and Europe escalate
In a striking contrast, US asset managers are falling behind their European counterparts in responsible investment, particularly in areas such as climate resilience and stewardship alignment. This disparity can be largely attributed to stronger political and regulatory pressures in the US that have led to an ESG backlash and withdrawals from sustainability initiatives.
Recent data reveals that the US has experienced a significant ESG backlash, with some US asset managers withdrawing from collaborative sustainability initiatives such as the Net Zero Asset Managers Initiative. This withdrawal is reflected in the decrease of signatories from 63% in 2024 to 57% in 2025. This reflects the political pressure and controversy surrounding ESG investing in the US context ([1], [2]).
On the other hand, European asset managers demonstrate a higher commitment level to stewardship codes and net zero plans, maintaining more consistent ESG integration across firms. In 2025, European asset managers had a commitment rate of 69% to stewardship codes and 65% to net zero plans ([1], [2]).
Survey data highlights more consistency in European asset managers’ embedding of ESG factors and stewardship practices compared to their US peers, who demonstrate greater variation in fund quality and ESG application ([1], [3]). The regulatory environment in Europe, including ongoing consultations on UK Sustainability Reporting Standards, supports greater transparency and accountability in ESG practices, encouraging asset managers to maintain and elevate climate resilience efforts ([1], [2]).
In contrast, US asset managers face challenges in climate reporting and disclosure stability due to the politicized nature of ESG topics in the US, contributing to slower progress compared to Europe ([2]).
Notable European firms like Aviva Investors, Robeco, and Legal & General were singled out for encouraging companies to disclose location-level biodiversity risks and impacts. However, the voting records of BlackRock, State Street, and other managers at shareholder meetings suggest minimal support for environmental resolutions. Only 5% of managers restrict investment in companies operating in globally important biodiversity areas.
The divergence in performance appears linked to stronger regulatory frameworks in Europe, such as the EU's Sustainable Finance Disclosure Regulation and the UK's Stewardship Code. None of the four US firms assessed achieved a single climate-related standard, such as setting meaningful emissions targets or restricting investment in fossil fuel expansion. These four US firms manage over a third of all assets included in the survey.
The report warns that the overall pace of change is stagnating, with little progress made since 2023. The world's largest asset managers, BlackRock, Vanguard, State Street, and Fidelity, earned failing grades and collectively met just 4 out of 80 possible key standards across climate, biodiversity, and social issues.
The Point of No Returns 2025 report, published today, states that many US managers are significantly lagging in responsible investment compared to their European counterparts. The report measures the 76 largest managers against 20 standards of responsible investment, including governance, stewardship, climate, biodiversity, and social impacts.
Engagement strategies are widespread in theory, but only one-third of firms take concrete action when companies fail to improve their practices. The New York City comptroller has warned managers to step up their climate ambitions or risk divestment. European managers significantly outperform their North American and Asian peers across all environmental themes, including climate change and biodiversity.
However, it's important to note that this article presents factual information and does not aim to pass judgment or express opinions. The goal is to provide a clear and concise overview of the current state of responsible investment in the US and Europe.
References:
[1] Report Name (2025). Link to the report.
[2] Report Name (2024). Link to the report.
[3] Survey Name (2025). Link to the survey.
- Despite a significant ESG backlash in the US, European asset managers are demonstrating a higher commitment level to stewardship codes and net zero plans, with a commitment rate of 69% and 65%, respectively, in 2025.
- In contrast to the stronger political and regulatory pressures in the US, the regulatory environment in Europe supports greater transparency and accountability in ESG practices, encouraging asset managers to maintain and elevate climate resilience efforts.
- Engagement strategies are widespread among asset managers, but only one-third of firms take concrete action when companies fail to improve their practices, a gap that is more noticeable in the US compared to Europe.
- The Point of No Returns 2025 report warns that many US managers are significantly lagging in responsible investment compared to their European counterparts, particularly in areas such as climate change and biodiversity, as most of the world's largest asset managers fail to meet key standards across these issues.
