Net-zero norms in sustainable finance: what explains asset managers’ target-setting?

Cora Buentjen, Richard Perkins and Rory Sullivan

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: A growing number of investors are adopting net-zero targets. Based on semi-structured interviews with 20 asset managers – primarily investing in public equities and fixed-income – this paper investigates the factors influencing target-setting. Novel to the literature, we show that investor coalitions have played a central role in the institutionalisation of net zero, including through the dissemination of ‘best practice’ guidance. However, significant variations are found in the degree to which asset managers have aligned with, or even exceeded, this guidance. To understand this heterogeneity, we propose a new typology, which distinguishes investors as hedgers, fast followers, and leaders. A combination of internal factors (such as resources and organisational values) and external pressures (including client preferences and regulatory contexts) are shown to explain these variations. Our analysis reveals that net-zero target-setting is largely a continuation of asset managers’ past responsible investment practices, shaped by their existing capabilities, beliefs, and client bases.

Keywords: net zero; investor; asset manager; decarbonisation; climate change; fiduciary duty; greenwashing; coalition; entrepreneurship; institutionalism (search for similar items in EconPapers)
JEL-codes: G11 Q51 Q58 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2025-07-02
New Economics Papers: this item is included in nep-ene and nep-env
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Published in Journal of Sustainable Finance and Investment, 2, July, 2025. ISSN: 2043-0795

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:128341

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