Insights
Sustainable investing Active ownership: An investor's best tool for real climate accountability
As climate headlines grow louder and more divisive, investors face a simple choice: engage or risk being left behind.
Author
Maka Indorbaeva
Sustainable Investment Manager
Duration: 2 Mins
Date: Oct 29, 2025
Amid evolving political discourse around climate policy, investors may ask: does decarbonization still hold relevance?
For anyone seeking long-term financial resilience, the answer is a resounding yes. Decarbonization still matters, even when headlines suggest otherwise.
Despite the noise, many of the world’s largest companies are doubling down on climate commitments. Between late 2023 and mid-2025, the number of companies setting science-based decarbonization targets surged by 227% (Chart 1).
Chart 1. Companies doubling down on climate commitments
However, ambition is only the starting point. The real test is delivery – and that’s where we believe active ownership becomes essential.
Turning pledges into progress
Active ownership means investors don’t just passively hold securities; they engage, they challenge, and they hold management teams accountable for their climate strategies.
In today’s market, this is no longer optional. Active ownership is a crucial tool in an investor’s toolbox, enabling constructive dialogue with companies to ensure they are prepared and resilient in an energy transition.
Measuring and managing aggregate financed-emissions exposure is important. Why? Because financed emissions – those linked to companies held across equity and debt investments – represent potential energy-transition risks associated with decarbonization. If these companies fail to decarbonize, it may place the long-term value of the portfolio at risk.
How engagement works
Since 2023, we have made it a priority to tackle the most carbon-intensive holdings within our portfolios. For twenty of these highest financed emitters, we’ve established over 75 engagement objectives, averaging nearly four objectives per company.
We track each objective to assess and accelerate progress on climate-related risks and opportunities. Using our Maturity Scale Alignment framework in combination with our engagement efforts, we can analyze and determine how aligned companies are with their climate commitments.
We look for information beyond decarbonization targets, delving into strategy, disclosures and capital allocation. We also seek to assess factors such as historical performance, climate governance, technology readiness and policy supportiveness. This data informs us of our engagement objectives and helps us hold companies accountable for their actions.
So far, almost one-third of these objectives have been fully met, while others are progressing through the complexities of the energy transition. This initiative now covers nature-related risks and human rights as well, and we will nearly triple our initial engagement footprint by the end of 2025.
What we learned
- Execution gaps persist. While 90% of companies have pledged to achieve decarbonization goals by 2050, 80% struggle to deliver actual emissions reductions (Chart 2). This may be due to some key decarbonization technologies still maturing and/or lacking scalability.
- Policy uncertainty is a real barrier. Shifting US policies, such as the repeal of some clean energy tax credits from the Inflation Reduction Act and changes in Environmental Protection Agency regulations, are delaying some investment decisions, particularly in high-emitting sectors, such as utilities and car manufacturers.1
- Caution among companies. Many firms are pulling back from long-term decarbonization targets unless delivery pathways are clear and predictable.
- The transition isn’t linear. In sectors such as oil and gas or mining, decarbonization strategies are vulnerable to commodity cycles. Companies may reinvest in low-carbon initiatives during boom times but revert to fossil assets in downturns.
- Escalation works. When dialogue and engagement stall, voting against disputed management proposals can send a powerful signal and drive real change.
Chart 2. Decarbonization alignment – a work in progress
Key investor takeaways
- Scrutinize financed emissions. Know which holdings contribute most to your portfolio’s carbon footprint and engage directly with these companies.
- Engage, don’t just observe. Ask tough questions about how companies plan to deliver on their climate pledges. Look for evidence of credible strategies, not just ambitious targets.
- Use your voting power. When dialogue fails, use your votes to express concerns and reinforce accountability.
- Expect non-linear progress. Be prepared for setbacks and cyclical challenges, especially in hard-to-abate sectors, or sectors where decarbonization technologies are not developed and/or scaled up.
- Broaden your lens. Climate risk is evolving; nature-related risks and human rights are also material to long-term value.
- Be constructive. Companies operate within varying constraints, as investors we seek to be constructive and support companies navigating complexities.
Why this matters to every investor
Active ownership isn’t just for sustainability specialists or teams. It is a core part of risk management and long-term value creation. In a world where climate policy and technology are in flux, investors who engage – rather than simply observe – are best positioned to build resilient portfolios.
Final thoughts
Active ownership is the investor’s best tool for driving real climate accountability. By engaging with companies, scrutinizing their strategies, and using escalation levers, such as voting power, when needed, investors can help shape a future that is not only more sustainable – but also financially resilient.
Endnotes
1 The Inflation Reduction Act (IRA) is a landmark legislation aimed at reducing the federal deficit, lowering prescription drug prices, and investing in clean energy, signed into law on August 16, 2022.
Important information
Projections are offered as opinion and are not reflective of potential performance. Projections are not guaranteed, and actual events or results may differ materially.
AA-291025-200348-1
