Addressing training and gaps in net zero targets is crucial as 40% of investment managers struggle to gauge their progress

An early preview of LCP’s biannual Responsible Investment manager survey of 119 managers, due later this month, shows that many investment managers still need to do significant work to contribute effectively to an orderly transition to net zero.

Of those investment managers that expressed a view, 57% believe that the transition to net zero is more likely to be disorderly, than orderly or failed. It is a good sign that more managers (69%) of managers are now working towards net zero emissions for some of their assets (an increase from 59% in our 2022 survey). However, LCP also found that the percentage of managers aiming for net zero across all their assets has actually decreased since then. Alongside this, the proportion of managers choosing not to set a net zero target has remained unchanged. Also, while 56% of managers working towards net zero said they are on track, 40% admitted that ‘it is hard to say’ at this stage. In response, LCP is urging managers to identify and address any gaps in their transition plans to help ensure a smoother path to achieving net zero targets.

When it comes to training, more than half of the managers (51%) reported that their investment professionals receive less than five hours of training on responsible investment topics each year. However, there has been some improvement in board oversight; 81% of managers now have someone at the board level responsible for overseeing ESG and stewardship, up from 67% in our 2022 survey. Yet only 25% of board members have mandatory responsible investment training, compared to 74% of relevant staff.

Sapna Patel, Principal at LCP and Lead Author, commented:

“There is a higher level of board oversight of responsible investment activity at investment managers now than there was in our previous survey. Crucially, this oversight must go hand in hand with sufficient training for those board members, and this has not improved from a low base last time.

Responsible investment is a complex and rapidly changing field, so it’s important that investment professionals and board members with oversight responsibilities receive sufficient training to stay up to date and make informed decisions.”

Claire Jones, Partner and Head of Responsible Investment at LCP, added:

“More investment managers are talking about net zero, either proactively or in response to asset owner demand. While it’s encouraging to see many managers believe they are on track to meet their net zero targets, we need to see more managers targeting net zero across all their assets under management. Every portfolio matters for achieving net zero, so all assets, not just some, must be considered.

Crucially, to protect portfolios from broader financial risks, these targets need to be backed up by actions that drive real progress toward net zero emissions.”