Drop in asset owners including responsible investment clauses manager contracts

The number of asset owners including responsible investment clauses in their management agreements has fallen over the past year, while scrutiny of proxy voting activities is on the rise.

That’s according to new figures from the United Nations’-backed Principles for Responsible Investment (PRI), based on the reports of more than 3,000 of its signatories, representing nearly $90trn in combined assets under management.

Between 2023 and 2024, there was a rise in the proportion of asset owners that didn’t include any responsible investment clauses in their contracts with managers, from 14% to 19%.

Fewer required their managers to adopt their exclusion criteria, incorporate material ESG factors into investment and stewardship activities, or report on their responsible actions over the period.

Meanwhile, there was notable growth in the proportion of asset owners paying attention to proxy voting practices at investment managers when awarding mandates.

Nearly 40% said they evaluated managers’ positions on high-profile votes in 2024, compared with 27% in 2023.

There was also an increase in the number of asset owners evaluating how many annual general meetings their managers voted at, and the frequency with which they voted for or against company management.

On climate change, almost every investment approach grew or remained stable in 2024, including the uptake of internal policies, and disclosures made to clients and beneficiaries.

However, the number of investors using climate metrics in their investment decisions went down. While 65% of respondents said climate metrics were a part of their process in 2023, this fell to 62% in 2024.

It is unclear whether the PRI’s figures reflect a genuine cooling on sustainability issues by investors, or whether the numbers are the result of a ‘greenhushing’ trend.

The growing pushback against ESG in the US since 2023 has made many financial institutions reluctant to talk publicly about the influence that sustainability issues have on their decisions and policies.

More than half the respondents are headquartered in Europe, with 23% located in North America and 10% in Asia.

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