How Investor Coalitions Are Adapting to a Contested Climate Landscape
Cora Buentjen and Dr Rory Sullivan
In the early 2020s, investor-led climate initiatives flourished. Coalitions like the Net Zero Asset Managers Initiative (NZAM), the Net Zero Asset Owner Alliance (NZAOA), and Climate Action 100+ grew rapidly, drawing hundreds of signatories and trillions in assets. These groups normalised net-zero target-setting, developed shared methodologies, and enabled investors to engage with corporations and policymakers at unprecedented scale.
Since then, the landscape has shifted. In response to strong political and legal backlash against ESG integration, major financial institutions have withdrawn from prominent climate change and net zero coalitions, and the coalitions themselves have found themselves under attack in particular in the United States. In fact, NZAM itself was suspended for much of 2025 before relaunching in early 2026.
In a recent article, published in theISEP Sustainable Finance Insight Journal Volume 6: Stewardship and Active Ownership, we examine how investor-led climate initiatives are evolving in response to these headwinds. Reflecting on the relaunch of NZAM, we examined three ways that the initiative has adapted to this changing landscape.
1. Offering Flexibility on the Scope of Commitments
The original NZAM framework required signatories to commit a defined proportion of assets to net-zero alignment, with the expectations that the scope would increase over time. The relaunched version allows signatories to define the scope of their commitments in line with their fiduciary duties, client mandates, and legal requirements. This flexibility – while signalling a retreat from the universalist ambitions of the original framework – was designed to allow asset managers to participate by permitting them to limit the coverage of their commitments; this flexibility was particularly welcomed by those with substantial US operations, given that an all-or-nothing approach might have pushed them out entirely.
2. Explicitly Recognising Fiduciary Duty
Critics have argued that net-zero commitments introduce non-financial considerations that conflict with investors' duty to act solely in beneficiaries' financial interests. Rather than treating fiduciary duty as an obstacle, the relaunched NZAM now explicitly states that all commitments must align with signatories' fiduciary and legal duties. This positions climate action as a core part of fiduciary best practice whereby prudent long-term investors have an obligation to analyse, manage, and act on climate change. Expressed another way, the analysis and management of climate change is an integral part of how investors deliver on their fiduciary duties to their clients and their beneficiaries.
3. Focusing on Paris Alignment Rather Than Net Zero
The original NZAN commitment centred on the goal of net-zero by 2050 whereas the relaunched version focuses on alignment with the goals of the Paris Agreement. This preserves the initiatives strong links to internationally-agreed climate objectives while avoiding imposing targets that may be politically sensitive in different jurisdictions. The emphasis on the Paris Agreement also accommodates investors in markets where national net-zero targets are expected to be delivered in later years (e.g. 2060 or 2070).
The Balancing Act Ahead
The core challenge for collaborative climate initiatives is that credibility and momentum can pull in opposite directions. Strengthening commitments and tightening accountability builds credibility but risks losing members. Conversely, maintaining participation by loosening standards invites accusations of greenwashing.
The case for investor collaboration on climate remains compelling. The challenge is to build structures robust enough to deliver meaningful outcomes in an environment that is considerably more demanding than the one in which these coalitions were born. NZAM provides an excellent example of how that might be achieved.
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Notes:
1. Rory and Cora’s article, ‘Designing Collective Engagement Initiatives for Today’s Investment Markets’ in Volume 6 of the Sustainable Finance Insight Journal can be found at: https://isepglobal.org/policy-and-practice/sustainable-finance/sustainable-finance-insight-journals/
