NZAM relaunches: where do global asset managers stand?
The NZAM initiative has relaunched without the expectation that managers work towards cutting carbon emissions from portfolio investments by 2050 (Unsplash/Karsten Würth)
The Net Zero Asset Managers initiative relaunched last week, but it returns at a delicate moment for asset managers navigating political pressures in the US and a more nuanced environmental, social and governance environment in Europe. While a number of European asset owners have rallied behind the updated pact, US-operating managers remain wary of the reputational risks tied to climate commitments.
The NZAM initiative has relaunched without the expectation that managers work towards cutting carbon emissions from portfolio investments by 2050.
But some consultants have expressed concerns that the more relaxed pact will affect the way asset owners set expectations for managers over climate-aligned investments.
Jordan Griffiths, senior sustainability investment consultant at Barnett Waddingham, tells MandateWire Analysis that some in the industry believe the removal of the 2050 timeline and wider review have "diluted the initiative's impact".
However, he adds that "many others recognise that recalibration was necessary given today's economic and political realities".
NZAM paused after a months-long review with its stakeholders to ensure it "remains fit for purpose in the new global context". A spokesperson for NZAM confirmed to MandateWire Analysis that the review concluded on January 31, with the initiative resuming its regular activities on February 25, with the backing of more than 250 asset managers. In 2024, before a host of asset managers exited the initiative, NZAM had more than 315 members.
European managers including Aberdeen, Lombard Odier Investment Managers and Mirabaud Asset Management have endorsed the updated initiative, though some large US managers, including BlackRock and Vanguard, were absent from the signatory list at the time of the reboot.
On the day of the relaunch, Rebecca Mikula-Wright, NZAM's steering committee chair, said the "strong participation" in the initiative's relaunch reflected "the value NZAM signatories find in having a credible platform to demonstrate to their clients how they are addressing climate-related financial risks".
But Griffiths adds that the initiative has relaunched at a time where US-operating managers still have worries over the reputational and political risks around climate investing, which he says have "been mentioned repeatedly" in manager conversations.
"It's clear that many firms are now navigating an increasingly polarised client base," Griffiths says.
He adds that Barnett Waddingham believes NZAM will continue to "serve an important function" for managers, giving them a "platform that promotes transparency and supports alignment around shared goals".
While he says the relaxed timeline to reduce emissions will suit some asset owners with exposure to developing economies with different "decarbonisation pathways", it does "create a tension with the scientific consensus that a 2050 target is needed to avoid the most severe physical impacts of climate change".
European investors reassess high climate commitments
Other industry onlookers are also weighing up the role NZAM can play in a world of fragmented attitudes around climate investing.
Lindsey Stewart, director of institutional insights at Morningstar, tells MandateWire Analysis that there is still a "very clear ideological opposition to this increasing inclusion of sustainability-focused thinking in investing that the [US political administration] is pushing back against".
Stewart adds that the difficulties NZAM faced were a "culmination of trends that had happened from 2022 [and] 2023 onwards".
While a group of mainly European asset owners representing $3.7tn (£2.7tn) in assets has publicly supported the updated NZAM initiative, Stewart says even European investors have re-evaluated what they believe is achievable in terms of stewardship commitments.
2022 and 2023 saw large commitments on climate investing off the back of the landmark 2021 UN Climate Change Conference (COP26), held in Glasgow. Participating countries agreed to reduce carbon emissions by 45 per cent to reach net zero around mid-century.
But, at that time, Stewart says many investors "probably committed to things that they certainly couldn't deliver on their own".
Indeed, MandateWire's Deal Flow reports show that net inflows into ESG-related investments tracked in Europe rose to $42.8bn in 2025, from the net $39.6bn tracked in 2024 and the net $27.7bn registered in 2023. However, inflows were down on the peak of $55.6bn tracked in 2022 after the Glasgow climate conference. High inflows that year were more than double the $26.8bn tracked by MandateWire in 2021.
NZAM itself was born out of heightened post-pandemic interest in stewardship. After its launch at the end of 2021, the initiative was endorsed by more than 120 investors and investment management signatories after just six months, including HSBC Asset Management, Amundi Asset Management, BlackRock and Franklin Templeton.
At the time, these investors agreed to "reach net zero emissions alignment across their portfolios by 2050 or sooner", according to NZAM.
In the UK, meanwhile, the buzz around COP26 led to 60 companies listed on the FTSE 100 agreeing to the same 2050 timeline to eliminate carbon emissions, in line with the UN's Race to Zero campaign.
But Stewart says investors would have needed "policy support [and] international coordination to deliver the kind of emissions reduction that was envisaged by a lot of these initiatives".
Hopes of international collaboration have partly dwindled given the lower ESG appetite in the US. MandateWire tracked only $4.5bn in net ESG inflows in the Americas last year, down considerably on the $23.8bn seen in North America in 2024 and $32.5bn in 2023. In North America, ESG inflows were $12bn in 2022 and $4.8bn in 2021.
The future of stewardship: a tale of two continents?
While the timeline for managers to implement net zero has become more flexible under NZAM's commitment statement, a number of European asset owners have rallied around the initiative, which they say is a core part of their sustainability and stewardship strategies.
Faith Ward, chief responsible investment officer for the £35.9bn Brunel Pension Partnership, says NZAM is a "credible mechanism" for managers to show their alignment with clients on their climate targets.
She adds that Brunel supports climate agreements "that raise the standard for consistency, transparency and real-world implementation".
Meanwhile, Laura Hillis, managing director, responsible investment, at the £3.4bn Church of England Pensions Board, says participation in NZAM was "key" to provide the asset management industry with "best practice tools and frameworks" around climate management, and that the initiative would help to "lift standards across the whole investment industry".
In its Task Force on Climate-related Financial Disclosures Report, dated 2024 but published in 2025, the Church of England Pensions Board notes that many of its climate targets were "linked" to the NZAM initiative. However, NZAM is absent from the fund's 2025 climate action plan, which lists an affiliation with more than five other industry initiatives, including Climate Action 100+, the UN Principles for Responsible Investment and the Paris Aligned Asset Owners.
The Church of England Pensions Board was approached for comment but did not respond by the time of publication.
Other UK asset owners have made their climate requirements for managers more flexible.
The £65bn Border to Coast Pensions Partnership has removed its explicit requirement for managers to be signatories of NZAM, though a spokesperson tells MandateWire Analysis that the fund still "expects managers to be members of respected initiatives", and encourages managers "to make a firm-wide net zero commitment".
Support in the US for NZAM currently appears much lower than in Europe, following what Stewart calls a "lot of direct pressure on US asset managers" from the government over their sustainability and stewardship efforts. This, he says, has led to a "bit of a turbulent year" and a "really difficult time" for NZAM and other climate accords.
Griffiths says he has seen examples of "managers adopting a split approach, tailoring their stance on sustainability issues, including which initiatives they sign up to, on a region‑by‑region basis".
State Street Investment Management, for instance, has pulled its American business out of NZAM, but confirmed in October that the European and British arms of its business would both remain part of the initiative.
Stewart says the change in attitudes around NZAM has "brought into stark relief the sharp difference in perception of fiduciary duty and materiality that exists between the US, which has a rather narrow shareholder-focused, financially focused definition of materiality, and other jurisdictions, particularly those in Europe".
He adds that European investors are "openly embracing of what they call double materiality thinking, where you can consider both financial and environmental and social outcomes at the same time".