Investor climate initiatives are facing unprecedented scrutiny at a time when the policy landscape is shifting rapidly, and the effectiveness of current investor actions is being actively questioned. Against this backdrop, this project reexamines core assumptions about the role of investors in addressing climate change explores what credible, evidence-based climate goals, target-setting approaches, and actions should look like for asset owners and asset managers.
The research team has engaged with over 60 investors across Amsterdam, London, New York, and Singapore, gathering perspectives from institutions that are participating in, have stepped back from, or have never joined climate-related initiatives.
Most investors agree that climate change is financially material and that they have a role to play in addressing it. What they are now much less confident about is the idea that investors acting through targets, disclosure and stewardship alone can drive economy‑wide decarbonisation without supportive government policy.
Across the workshops we heard a consistent message: climate action needs to be grounded in a more realistic understanding of investor agency, recognition of the boundaries of fiduciary duty, and how far markets can move without policy shifting the underlying economics.
The report argues for a more realistic account of investor climate action:
- from a market‑led narrative to a policy‑led one;
- from ever more comprehensive targets to more focused, credible objectives;
- and from over‑promising to a more candid account of limits, trade‑offs and roles.
This is not a call for retreat. Investors still have an important role to play: through stewardship, policy advocacy where legitimate, capital allocation to climate solutions, and pricing climate risk correctly. But that role is supporting and reinforcing, not substituting for governments.
For investor climate leadership to remain credible in 2026, it needs to combine ambition with realism about what investors can, and cannot, do.
This research project is funded by Environmental Defense Fund and the LSE Global School of Sustainability.
LSE Research Team: Professor Tom Gosling, Dr Hans-Christoph Hirt, and Dr Fernanda Gimenes.
