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

Buentjen, Cora, Perkins, Richard ORCID: 0000-0002-4963-6494 and Sullivan, Rory (2025) Net-zero norms in sustainable finance: what explains asset managers’ target-setting? Journal of Sustainable Finance and Investment. ISSN 2043-0795

Text (Net-Zero norms in sustainable finance what explains asset managers target-setting) - Published Version Available under License Creative Commons Attribution. Download (1MB)

• Scopus publication

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.

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	Geography and Environment
Subjects:	G Geography. Anthropology. Recreation > GE Environmental Sciences G Geography. Anthropology. Recreation H Social Sciences > HG Finance
JEL classification:	G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice; Investment Decisions Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q51 - Valuation of Environmental Effects Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy
Date Deposited:	10 Jun 2025 14:33
Last Modified:	17 Jul 2025 16:21
URI:	http://eprints.lse.ac.uk/id/eprint/128341

Actions (login required)

View Item