Untapped Potential:

Asset Owners and Climate Policy Influence

Assessing the world's largest institutional investors' climate policy influence

This research highlights a key opportunity for the world’s largest asset owners to increase their impact on addressing the climate crisis by facilitating the implementation of ambitious climate-related policy, both in the real economy and the financial sector. Asset owners may do this by conducting policy engagement directly and through industry associations, as well as by stewarding their asset managers and investee companies on these entities’ own climate lobbying activities. As long-term custodians of significant financial assets, asset owners have a vested interest in enabling the implementation of supportive policy frameworks to guide the transition, while holding substantial influence to do so. Although a core group of asset owners has emerged as leaders on direct climate policy engagement and stewardship of investee companies’ climate lobbying, this report finds that the bulk of the sector has significant room to improve in this key area of climate impact.

• In this report, InfluenceMap assesses the world’s largest asset owners (representing at least $17 trillion in assets) and finds that, despite some entities scoring positively in one or more assessment areas, no asset owner has fully utilized all its various levers of influence to push for government policy action to achieve net zero by 2050. These levers include direct stewardship of investee companies’ climate lobbying practices; indirect stewardship of investee companies’ lobbying practices via external asset managers; setting expectations for and managing asset managers’ climate lobbying activities; and asset owners engaging in climate policy influencing themselves, either directly or via industry associations.
• There is growing recognition of the role asset owners can play in affecting climate policy globally, illustrated by the formation of the UN-convened Net Zero Asset Owner Alliance (NZAOA) which has explicitly recognized the role asset owners should play in advocating for government policy to achieve climate goals. Eleven of the 30 asset owners assessed are members of NZAOA and 22 of the 30 have set a net-zero commitment.
• On their stewardship of investee companies' climate lobbying practices, the assessed asset owners receive scores ranging from A- to F (from a possible range of A+ to F). Three quarters of asset owners score a D+ or below, demonstrating an overall lack of stewardship on climate policy engagement. Some European insurers, including Phoenix Group and Aegon, as well as some US and European pension funds, including the New York City Retirement Systems (NYCRS), the New York State Common Retirement Fund (NYSCRF), the California State Teachers’ Retirement System (CalSTRS), and the Government Pension Fund Global (GPFG) of Norway, have demonstrated more robust stewardship on companies' climate lobbying through actions such as engagement with companies on their public policy advocacy and filing shareholder resolutions on climate lobbying transparency. However, low levels of transparency on stewardship activities drive generally low scores.
• Only two asset owners, Aegon and the New York City Retirement Systems (NYCRS), demonstrated engagement with asset managers on their stewardship practices regarding investee companies' climate lobbying, by pushing external asset managers to vote in favor of climate lobbying shareholder resolutions. Additionally, only two asset owners, Aegon and Allianz, demonstrated engagement with asset managers on managers’ own lobbying activities, an emerging mechanism for climate policy influence.
• There are some standouts in terms of direct climate lobbying activities. The California Public Employees Retirement System (CalPERS), the New York City Retirement Systems (NYCRS), the New York State Common Retirement Fund (NYSCRF), the California State Teachers’ Retirement System (CalSTRS), and Stichting Pensioenfonds ABP (ABP) demonstrate policy advocacy aligned with science-based pathways to limit warming to 1.5°C. These entities have advocated in support of specific climate-related policies including mandatory corporate climate disclosures, regulations and guidance to protect shareholder rights, and local and national policies to decarbonize buildings, finalize stringent vehicle emissions standards, and increase government investment in renewables.
• Despite some standouts in direct lobbying activity, there is room for many asset owners to increase policy advocacy and undertake more strategic engagement. There is also an opportunity for all the asset owners assessed to take stock of the climate policy engagement activities of their industry associations, in both the financial sector and the real economy. For example, seven of the 30 asset owners maintain links to industry groups that are misaligned with science-based pathways to limit warming to 1.5°C and have obstructed climate policies for the financial sector and the real economy.

Tracey Rembert, Associate Director of Climate and Environmental Justice at the Interfaith Center on Corporate Responsibility said:

“Quarterly meetings with investment managers are a ripe opportunity for asset owners to begin raising questions of how those managers are advocating for climate policies that can de-risk the portfolio and lead to more rapid decarbonization progress. At minimum, it shows that asset owners are paying attention to climate policy, and more importantly, it starts the critical conversation of what managers are doing to drive lower emissions across the investment universe—not just on a company-by company basis.”

A spokesperson for the Net-Zero Asset Owner Alliance said:

“For asset owners to effectively enact climate policy advocacy they must engage with their most important strategic partners – their asset managers. Meeting their net-zero commitments will become increasingly challenging without such engagement. In Aligning Climate Policy Engagement with Net-Zero Commitments, the Alliance outlines best practices for assessing asset managers’ climate policy engagement. The Alliance advises members and asset owners more widely to integrate this assessment into their selection, appointment, and monitoring processes of asset managers.”

All firms covered in this research were offered the opportunity to review the analysis and provide feedback prior to release. For details on our content and terms of use, please see our Terms and Conditions.

For any questions about this report, please reach out to media@influencemap.org.