Asset managers ‘raising the bar’ on sustainable investing; disclosure concerns persist

Written by Callum Conway

05/08/2025

Asset managers continue to raise the bar on sustainable investing, although concerns remain over climate reporting and disclosure, according to research from Isio.

The latest findings from its Sustainable Investment Survey, which reviewed more than 140 funds from 65 asset managers, found that almost all (97%) asset managers have an established environmental, social and governance (ESG) policy and dedicated sustainability teams in place, despite recent high-profile withdrawals from climate initiatives and concerns around fund labelling.

It said overall levels of ESG integration remained “robust” at the firm level, with more asset managers committing to the UK Stewardship Code (69% in 2025 vs. 65% in 2024) and net-zero plans (65% in 2025 vs. 58% in 2024).

The findings are particularly timely with the Department for Business and Trade currently consulting on draft UK Sustainability Reporting Standards, which closes next month.

Isio head of sustainable investment, Cadi Thomas, said it was “encouraging” to see that progress on sustainable investing had continued, even in the face of a wider ESG backlash, particularly in the US.

“Most firms are holding firm on their commitments, and we’ve seen positive steps forward in areas like reporting and risk management, which are key foundations for long-term integration,” she added.

However, while the research found continued strong progress at firm level, it revealed some inconsistencies in how ESG was embedded, evidenced and disclosed at the fund level.

Just over half (54%) of strategies assessed provided what Isio defined as sufficient fund-level reporting.

These gaps were particularly evident in private markets strategies, where data limitations and methodological inconsistencies remained key challenges.

This was despite improvements in some areas, with over two-fifths (41%) of funds aligned to the Taskforce on Climate-related Financial Disclosures (TCFD), including scope 3 emissions disclosures.

Social and nature-related disclosures also continued to improve with 39% and 17% of funds meeting the benchmark in 2025, compared to 33% and 11% in 2024, respectively.

Due to rising political pressures, there have been some withdrawals from other collaborative sustainability initiatives, with signatories to the Net Zero Asset Managers Initiative (NZAMI) decreasing from 63% in 2024 to 57% in 2025.

In addition, ESG objective-setting has declined with just 39% of funds assessed adopting formal ESG objectives or focus areas in 2025, down from 49% last year.

Isio suggested this retreat may reflect increased regulatory scrutiny, evolving labelling regimes and a desire to avoid greenwashing claims.

Thomas acknowledged there was still “significant work” to do at the fund level.

“Disclosures remain inconsistent, particularly in private markets, and while climate reporting has improved, social and nature-related data continue to lag,” she continued.

“Fewer funds are adopting formal ESG objectives, potentially driven by increasing labelling scrutiny. This shift suggests a more cautious approach, likely in response to growing regulatory pressure.

“With sustainability reporting now firmly on the government’s agenda, now is the time to take stock and ensure strategies can stand up to increasing scrutiny,” Thomas concluded.

Related Articles