Asset managers failing to address climate risk can ‘expect to lose clients’

Asset managers are continuing to make substantial investments into fossil fuel developers’ bond issuance, with some actually increasing their holdings over the past year, despite pressure from institutional investors for greater climate action.

Reclaim Finance has, as a result, urged asset managers to take climate risk seriously or “expect to lose clients to those that do better”.

Fiduciary duty

Research from the NGO found 30 of the biggest US and European asset managers held almost $17bn in bonds newly issued by fossil fuel developers, and some asset managers including BlackRock and Amundi have increased their fossil fuel holdings via recently issued bonds. This, the NGO said, is exposing investors to climate-related financial risks.

Although many asset owners are engaging with asset managers to improve their climate practices, more needs to be done to limit the support for fossil fuel developers, the NGO added.

“Pension funds and other asset owners can no longer ignore the climate-related financial risks from working with asset managers that are investing in fossil fuel expansion,” said Reclaim Finance’s sustainable investment campaigner, Agathe Masson. “They have a fiduciary duty to act in the interests of their clients and beneficiaries, yet most seem willing to turn a blind eye.”

It pointed to the recent move by PFZW, the Dutch pension fund, which pulled approximately €29bn in mandates from BlackRock and other asset managers flagging risk and sustainability as factors.

“While some asset owners have already taken action, they must all demand more from their asset managers and insist on robust climate action. They must ensure that asset managers take their climate concerns into account and stop supporting on-going fossil fuel expansion. And if asset managers cannot meet their requirements, they must not entrust them with any new investments.”

See also: ESG investing is in line with fiduciary duty

Reclaim Finance also found no progress when it came to asset managers’ shareholder voting behaviour at company AGMs in 2025.

The 30 asset managers assessed did not use their votes to oppose fossil fuel companies’ expansion plans, and 81% of votes were on average in support of company boards of directors, including votes to re-elect directors responsible for expansion strategies. It found just one asset manager, Union Investment, stood out by voting to oppose fossil fuel expansion strategies at almost all the AGMs of fossil fuel companies.

Ben Cushing, director of the Sierra Club’s Sustainable Finance campaign, said: “Climate change poses a systemic risk to the entire economy and to the retirement security of millions of workers, and asset owners cannot protect portfolios if their asset managers are not prepared to confront that risk. If asset managers cannot provide credible plans to confront the climate crisis and steward investments responsibly, pension funds and other asset owners have an obligation to move their money to managers who will. Doing so sets a powerful precedent for other asset owners around the world: Asset managers who fail to take climate risk seriously should expect to lose clients to those that do better.”