Asset owners should use their powers more forcefully if collaborative initiatives such as Climate Action 100+ (CA100+) are to substantively tackle climate change, according to a new paper from the London School of Economics and Political Science (LSE).
The paper, Climate Action Through Governance Chains: Investor Coalitions and the Fallacy of Scale, argues that while large-scale collaborative initiatives have become prominent ways to mainstream climate action, many struggle to achieve their goals.
Authored by Nikolaus Hastreiter and Richard Perkins at the LSE, the paper asks why large investor coalitions struggle to convert their scale into corporate climate action.
The authors examined the governance chain to better understand where, how and why the management of paradoxical tensions causes climate governance to break down within collaborative investor-led governance.
Crucially, the asset owner–manager relationship emerged as a ‘choke point’ in the climate-engagement chain, the paper concluded.
Its findings draw on a qualitative single-case study comprising 56 interviews, 30 with companies, 22 with investors, including six asset owners and 12 asset managers, and four with experts, combined with thematic analysis of CA100+ publications and media coverage.
Among the paper’s core messages is that investor scale alone is insufficient and that asset owners must change the mandates and incentives transmitted through the investment chain.
The findings build on an earlier LSE study by Hastreiter, which found no evidence that CA100+ had significantly improved climate reporting or reduced emissions. Last year, PRI data showed an increase in the proportion of asset owners without responsible-investment clauses in their manager contracts.
More recently, the Institutional Investor Group on Climate Change (IIGCC) urged asset owners to use manager selection and investment-management agreements more effectively to drive climate stewardship.
CA100+ shortcomings
The latest LSE paper argues that CA100+’s huge membership and combined assets are poor proxies for its real-world influence.
It goes on to argue that the initiative’s impact has largely been confined to corporate disclosure, rather than producing material changes in strategy, investment or emissions.
When confronted with the corporate view that CA100+ had largely served as a catalyst for disclosure rather than substantive action, most investors agreed, according to Hastreiter and Perkins.
One European investor who did not want to be named said: “Unfortunately, I think that is true. […] Way too much of it is focused on disclosure.”
Another said anonymously: “Well, I think I also agree with that. Without [CA100+] it would probably happen as well, but take longer.”
Looking ahead, the paper urges asset owners and investor coalitions to give long-term climate objectives genuine weight alongside short-term returns, rather than assuming the two are always compatible.
