Investment consultants must now demonstrate that climate-related capabilities previously considered aspirational have become core components of their offering, according to updated industry standards. The Investment Consultants Sustainability Working Group (ICSWG) has revised its Climate Competency Guide to reflect a landscape where the “leading” practices of 2021 are now viewed as “business as usual” for advisers to institutional investment firms.

The updated framework provides a structured approach for asset owners to evaluate their investment consultants across five key themes: firm-wide expertise and commitment, individual consultant knowledge, the sophistication of tools and software, thought leadership, and the assessment of investment managers. By distinguishing between typical and leading indicators, the guide allows trustees to differentiate between baseline service delivery and proactive leadership in climate-related risk management.

The 2026 guidance also recognises the “complex interplay” between climate change and broader natural and social factors. Advisers are increasingly expected to demonstrate how climate risks intersect with biodiversity and social impacts, providing more holistic advice that keeps pace with evolving regulatory expectations. This evolution reflects the growing maturity of institutional portfolios, where expertise is required to manage systemic environmental and social risks alongside financial performance.

The revision is designed to help trustees and asset owners of all profiles hold their advisers accountable. By using the framework to set specific performance metrics and objectives, trustee boards and investment committees can ensure their consultants possess the expertise and tools necessary to support evidence-based decision-making.

“As the understanding of climate-related issues continues to evolve, it’s important that asset owners can effectively evaluate the capabilities of those giving them advice,” said Simon Jones, Co-chair of the ICSWG and Head of Responsible Investment at Hymans Robertson.

“Updating the framework to reflect changing expectations is therefore vital to ensure that evolving best practice continues to be integrated into advice. The input we have received from asset owners and other stakeholders has been critical to this process and we hope the guide will remain a helpful and widely used resource.”

In updating the guide, the ICSWG consulted with a range of industry stakeholders including Pensions UK, the Pension Regulator and the Trustee Sustainability Working Group.

The ICSWG is a group of UK investment consultancy firms focused on building consistency, enhancing standards, and supporting practical approaches to sustainable investment practices, on behalf of asset owners and the investment industry.

People’s Pension, the UK’s largest commercial master trust pension scheme, has abandoned its use of a single overarching 1.5°C-aligned climate target across its portfolio, citing a lack of policy action.

The scheme, which looks after £40 billion in assets on behalf of seven million members, said that global greenhouse gas emissions were not on track to limit climate change to 1.5°C above pre-industrial temperatures. It noted also that the target had been put in place to mitigate the risks of Paris-aligned policies, which had “not materialised”.

According to a statement, People’s Pension will prioritise managing transition risks to asset values by implementing a “bottom-up approach” that reflect differences across markets, asset classes and sectors.

The scheme said it will continue to have a net zero ambition that is aligned with the Paris Agreement, but that “target-setting will also be considered on a case-by case basis”.

“This updated approach demonstrates a robust evidence-based process to support climate action that is grounded in a clear objective: to protect and grow our members’ savings, said Dan Mikulskis, Chief Investment Officer of People’s Partnership, provider of People’s Pension, citing the need to take account of seven years of evidence on market-wide decarbonisation and policy change since the scheme adopted its portfolio-level target.

“We believe the retention of a Paris-aligned ambition is important, but it must be rooted in bottom-up realities as to the role that investors can play in achieving it to ensure better outcomes for our members,” he added.

The announcement follows the commissioning of a comprehensive literature review from sustainable investment specialists Canbury.

People’s Pension said addressing climate risks and opportunities in portfolio construction will remain a priority, albeit based on valuation discipline and risk control, “rather than positioning that places too strong an emphasis on climate policy materialising”.

“We remain firm that climate change is a significant long-term financial risk, but that misaligned, or overly ambitious climate strategies can also harm our members if they rely on optimistic assumptions about the speed or nature of transition,” said Mark Condron, Chair of People’s Pension Trustee Board.

“By grounding our approach in real world evidence, we can back a credible transition while safeguarding the retirement outcomes our members rely on.”

Asian institutional investors are making “meaningful progress” in climate-aligned investment practices, according to new analysis from the Asia Investor Group on Climate Change (AIGCC). Despite perceptions of a global pullback in climate ambition, the data reveals a marked year-on-year increase in formal climate risk recognition – up to 63% – and a jump in climate solution investment targets, which now stand at 44%. Physical climate risk disclosure also saw a notable rise to 33%.

The study – which analysed data from more than one hundred asset owners – also found a six-percentage point increase in net zero commitments (to 40%) and a five-percentage point rise in firms with a deforestation policy.

To sustain this momentum, the AIGCC has launched the Asia 2030 Climate Playbook, a strategic guide designed to help pension funds, sovereign wealth funds, and life insurers navigate the transition to net zero. The playbook provides actionable frameworks, including “strategic archetypes” and real-world case studies, ensuring that climate strategies are rooted in pragmatic financial performance.

David Chua, Chief Investment Officer at Singapore-based Income Insurance, described the guide as a “significant milestone” that “consolidates diverse asset owner perspectives” and supports investors in scaling climate transition pledges.

Dato’ Rick Ramli, Group CEO of Malaysia’s Permodalan Nasional Berhad (PNB), emphasised the necessity of a “whole-of-portfolio approach” to integrating climate considerations. Eddy Porwanto, Acting CEO of the Indonesia Investment Authority (INA), added that the playbook’s recognition of varied “investment mandates, risk appetites, and regulatory environments” is essential for developing “practical approaches to climate and sustainable investing” across the diverse Asian landscape.

The AIGCC Asset Owners Program has convened over 50 asset owners representing US$ 13 trillion in AUM since its launch in April 2024.

Nest, the UK’s largest workplace pension scheme, has stiffened sanctions against portfolio companies that scale back on climate commitments in its 2026 voting policy update. 

The £60 billion (US$79.76 billion) fund will now consider voting against board chairs where a company has materially scaled back its climate strategy without adequate explanation. This strengthened stance aims to provide greater certainty to boards about how Nest will exercise its voting rights to ensure long-term value for its 14 million members.

The policy update reinforces Nest’s expectation that companies maintain credible net zero transition plans, requiring evidence-based justifications for significant changes to climate targets and investment plans. The scheme is also taking a firmer line on executive accountability for biodiversity. Nest has signalled it may vote against the re-election of sustainability committee chairs at companies in high-risk sectors that lack clear policies to eliminate commodity-driven deforestation. 

Nest has co-filed a shareholder resolution alongside the Australasian Centre for Corporate Responsibility (ACCR) seeking enhanced transparency on BP’s plans for increased capital expenditure for new oil and gas projects. This action aligns with Nest’s new guidelines for the oil and gas sector, which explicitly state the scheme will not support transition plans from companies that continue to develop new oil and gas fields.

However it has not publicly supported a resolution filed by Dutch campaign group Follow This requesting BP disclose strategies for creating shareholder value under scenarios of declining oil and gas demand. BP has sought to exclude the latter on grounds it does not meet legal requirements. 

Diandra Soobiah, Nest’s Director of Responsible Investment, said that the update supports constructive dialogue by giving boards clearer guidance on how their decisions will be evaluated in the interest of safeguarding members’ long-term financial futures.

“We have engaged — and where necessary, voted against — companies that weaken their climate plans and do not provide adequate transparency to shareholders.  We also expect companies to put material changes to their climate strategy or transition plan to a shareholder vote,” she said.  

“We believe being explicit about how we evaluate these issues supports constructive dialogue with companies. Clearer guidance gives boards greater certainty about how we will approach our voting decisions.”  

NGO ShareAction has praised the move, noting that as some major banks quietly roll back climate commitments, it is vital for leading pension schemes to demand accountability. 

“With the AGM season approaching, Nest’s move sends a straightforward message: if bank boards won’t treat climate risk as a core financial issue, they should expect pushback from responsible shareholders. We urge other pension funds to take the same approach to protect long-term savings,” said Kelly Shields, Senior Campaign Manager at ShareAction.

The largest electric utilities must significantly accelerate their efforts to reduce greenhouse gas emissions if they are to align with the Paris Agreement and protect investor portfolios from escalating climate risks. According to the latest progress update from the Asia Investor Group on Climate Change’s (AIGCC) Asian Utilities Engagement Program (AUEP), eight of the region’s systemically important power firms are not moving fast enough to address the structural shifts required for a low-carbon future.

The AUEP is a five-year engagement process led by a coalition of 23 institutional investors worth US$13 trillion in assets, focused its advocacy on major players including CLP Group, JERA, and Tenaga Nasional. The investors evaluate companies against five core expectations: the implementation of strong governance frameworks; the establishment of Paris-aligned emissions targets; enhanced corporate disclosure; the assessment of physical climate risks; and proactive engagement with public policy.

The 2026 update notes that utilities have made commendable progress in several areas. Most notably, there has been a marked improvement in corporate governance, with board-level oversight of climate issues becoming standard practice and executive pay increasingly linked to climate performance. Furthermore, most companies under review have now disclosed more detailed decarbonisation strategies and provided clearer information regarding their capital allocation plans for renewable energy and grid infrastructure.

The report also identified critical gaps where improvement is needed to protect long-term shareholder value. AUEP members were particularly concerned that capital is not yet shifting away from high-emitting assets at the scale or speed required to meet 2030 milestones. Additionally, physical resilience remains a major blind spot, with only CLP Group conducting asset-level climate risk assessments. Without such strategies, utilities face potential annual earnings drops of up to 7.3% due to climate-driven disruptions.

Further, none of the utilities have yet promoted greenhouse gas reductions across their entire value chains, leaving significant Scope 3 risks unaddressed. Investors also warned that the credibility of firms’ coal phase-out plans would face intense scrutiny toward 2030.

The AIGCC said it would deepen the quality of engagement with investors, businesses and policymakers on the AUEP’s key expectations; widen the existing engagement to non-listed and state-owned utilities; and support the AUEP through other thematic projects and external collaborations.