Investment managers are increasingly pessimistic about the prospects for an orderly climate transition, while a third of those surveyed by consultancy LCP said they are unsure whether major climate initiatives will still matter to the investment industry over the next five years.
LCP surveyed 120 investment managers for its latest Responsible Investment (RI) Manager survey, published today. The largest share of responses came from the UK (40%), followed by North America and Europe, with a small number from Asia.
“Despite the narrative around the impacts of the environmental, social and governance (ESG) backlash, our survey results indicate that many aspects of responsible investment (RI) practices continued to evolve in 2025. Overall, the results point to an industry that is adapting rather than retreating,” LCP said.
Nearly eight in 10 investment managers now expect a disorderly climate transition, up sharply year on year.
LCP found that 77% of surveyed managers expect a disorderly transition in 2025, up from 57% in its 2024 survey. The consultancy describes a disorderly transition as delayed or uneven action leads to abrupt shifts and volatility, particularly as a result of transition risks materialising.
Speaking to IPE, Sapna Patel, principal at LCP, said that given the survey’s disorderly-transition expectations, trustees should engage managers on the actions they are taking to manage climate risk.
“If they [managers] are not taking steps towards contributing to the management of climate as a systemic risk, such as engaging with policymakers and regulators or contributing to industry initiatives, then trustees should engage with them to understand why,” Patel said.
The consultancy noted that managers’ policy advocacy remains more focused on regulation and disclosures than on policies for the real economy and providing sustainable finance, “meaning opportunities for real-world impact through policy engagement are being missed”.
Industry initiatives
On collaboration, participation in key industry ESG initiatives is broadly flat compared with 2024.
Around a third of managers were unsure whether initiatives such as the Net Zero Asset Managers initiative (NZAM) and Climate Action 100+ will play a significant role in the investment industry over the next five years, although LCP noted views may change once NZAM relaunches later this month.
“Of the managers that told us why they had withdrawn from an ESG or net zero initiative, there were a variety of reasons given, including both doubts about impact and fear of legal or regulatory backlash,” said Patel.
“There were some managers who expressed a belief that they were more effective outside the initiative or didn’t think the initiative’s purpose was clear.
“However, it is interesting that all of the managers who told us that they left due to legal and/or regulatory risk were North American, so the key drivers are different depending on where the managers are based.”
LCP also found that climate scenario analysis remains an important tool for climate risk management, with most managers using quantitative and qualitative analysis of physical and transition risks for at least some strategies. However, 14% still do not use climate scenario analysis at all.
While board oversight of ESG and/or stewardship is now nearly universal (93%), LCP found that North American managers still lag behind their UK and European peers, and are more likely to cite litigation or regulatory risk as a barrier.
The survey was conducted between September and November 2025.
