Relationships between asset owners and managers undergo adjustment following the exit of NZAM
In the ever-evolving world of finance, a significant development has taken place as BlackRock, one of the world's largest asset managers, has exited the Net Zero Asset Managers (NZAM) initiative. This move, reported by Financial Times in 2025, comes amidst a parallel advancement in the standards governing net-zero commitments from financial institutions.
Nest, a major UK pension provider, regularly engages with fund managers to ensure their engagement with companies on climate-related risk and opportunities is ongoing. The departure of BlackRock, which previously managed over $7 trillion in assets aligned to net zero commitments through NZAM, has raised questions about the future of the initiative.
Samantha Chew, stewardship lead at Aegon, has expressed her satisfaction with BlackRock's recent release of new decarbonisation guidelines. Chew believes these guidelines could be game-changing, potentially setting a new standard for the industry.
The exit of BlackRock, along with other asset managers, has led to the suspension of NZAM's activities. In response, the initiative has initiated a review into its network's remit and suspended activities.
The void left by the exit of major players like BlackRock is being filled by more stringent and scientifically grounded net-zero standards. One such standard is the Financial Institutions Net-Zero Standard, released by the Science Based Targets initiative (SBTi) in July 2025. This framework provides clear guidance and criteria to ensure that financial institutions’ net-zero commitments are aligned with limiting global warming and are measurable.
For asset owners, these developments mean that while the original NZAM framework is losing some of its prominent participants, the launch of more stringent and scientifically grounded net-zero standards offers an alternative pathway with potentially greater credibility. Asset owners will need to monitor which standards their asset managers align with, as emerging norms like the SBTi's standard may offer more transparency and rigorous evaluation of climate risks and decarbonization progress.
Other asset owners, such as Swedish pension fund AP3 and the £48bn master trust Nest, have indicated they will re-evaluate their manager relationships in light of the NZAM exits. The US pension fund CalSTRS, which manages $349.7bn on behalf of educators in California, has approximately $4.3bn in exposures to BlackRock across various funds.
The departures are attributed to political and legal pressure, particularly the anti-ESG movement in the US and Donald Trump's return to the White House. Chew hopes that the strategic review and period of reflection will move the NZAM initiative to a stronger focus on effective activities.
Despite BlackRock's exit from the alliance, Aegon, a major UK client of BlackRock, argues that BlackRock has made significant progress on climate, despite having left the alliance. Aegon's stewardship approach involves communicating voting preferences with the manager ahead of the AGM and tracking voting patterns.
The NZAM initiative, launched five years ago, has primarily focused on target disclosures but lacks firm commitments to adjust investment strategies. Critics argue that membership has become a "tick box exercise," with concerns rising that this has not always translated into action on climate.
Chew argues that alliances can be useful for asset owners, but they need a stronger focus on undertaking the right activities in the most effective way. The future of net-zero commitments in the financial sector remains uncertain, but the trend towards more standardized, transparent, and accountable frameworks is clear. This evolution is critical for maintaining trust among investors and stakeholders and for effectively steering capital towards a low-carbon economy.
- The absence of BlackRock, a former member of the Net Zero Asset Managers (NZAM) initiative, has led environmental-science experts and asset owners to question the future direction of the initiative, as its departure could impact the alignment of finance with climate-change mitigation efforts.
- Aegon, a major UK client of BlackRock, acknowledges that while BlackRock has exited the NZAM initiative, the company has still made progress in the realm of climate change, particularly through their decarbonization guidelines, which could set a new standard for the industry.
