Mandates on the move: How ESG misalignment sparks asset owner action

Recent events show that some large European asset owners are reallocating major mandates after concluding that stewardship and proxy voting approaches with key partners no longer align with their sustainability objectives. This highlights a widening divergence in ESG stewardship approaches, one that has implications on long term‑ returns, transition risk and fiduciary alignment.

What’s changing: A widening gap in ESG voting between U.S. and European managers

Evidence from multiple independent datasets shows European managers continue to support a higher share of well‑framed environmental and social (E&S) shareholder proposals, while average support among large U.S. managers has fallen. For example, Morningstar’s stewardship research finds a “widening gulf” in support for significant E&S proposals during the 2024 season—~96% average support among 15 large European firms versus ~31% among the 20 largest U.S. firms. (External sources: Morningstar analysis; ESG Dive summary.) ^[1]

In parallel, ShareAction’s Voting Matters 2024 analysis of 70 large managers shows industry‑wide support hit a new low in 2024, driven especially by sharp declines among several large U.S.‑headquartered firms, while many European managers increased their backing. (External sources: ShareAction report; Net Zero Investor coverage.) ^[2][3]

WTW’s own analysis shows that voting patterns can vary significantly between managers. The chart on this page illustrates the voting behaviour of two large managers. Manager A has consistently voted in favour of climate shareholder resolutions. Whereas Manager B has typically voted against climate shareholder resolutions, albeit with notably more support briefly in 2021.

This has led to some large European asset owners reallocating major mandates after concluding that manager stewardship and proxy voting approaches no longer align with their sustainability objectives. Asset managers continue to grapple with the political tension, and some are turning to expanding client-directed or “pass-through” voting to reflect diverse references, but we have yet to see this widely used.

What this means for European asset owners with sustainable investing goals

• Selection risk: Label/disclosure regime names (e.g. “SFDR Article 8/9”) do not necessarily guarantee that the fund managers act in line with investor stewardship policies.
• Execution risk: Even managers with strong climate rhetoric may vote against key proposals (e.g., transition plans, audit of climate risk) if they deem them too prescriptive—so it’s important to have governance structures in place to monitor and verify behaviour.
• Governance risk: We can expect more tension between EU asset owners’ stewardship policies and some U.S. managers’ voting stances as legal and political developments continue to unfold. This further increases the complexity of already complex topic and the burden on asset owner investment committees to ensure their strategy remains in line with their beliefs. Ensuring the right balance between in house expertise and use of external specialists is crucial to keep ahead of the ever-evolving sustainable investing landscape.

How can you cut through the noise?

As the climate crisis accelerates, asset owners face a defining choice. We are helping asset owners cut through the noise and select or structure mandates that align and advance their strategy — whether that be exploiting the opportunities that the climate transition presents or mitigating the risks. If you are finding that your ESG ambitions are being challenged by inconsistent stewardship—or if you are uncertain about where your current managers stand—we are here to support you. Let’s explore how we can realign your strategy. We’re offering a complimentary ESG health check with one of our specialists to help you gain clarity and confidence*.

WTW Investments work across regions and styles to provide oversight, strategy advice, portfolio construction and monitoring services to ensure that your Sustainable Investing policy is implemented faithfully—whether that involves US, European, or global managers. We provide services to asset owners of all sizes and levels of sophistication.

Examples of ways we can help

References

1. ESG encountering widening ‘gulf’ between US and European investors ... Return to article undo
2. ShareAction | Voting Matters 2024 Return to article undo
3. Stewardship divergence: US managers scale back support for climate ... Return to article undo

Footnote

*WTW reserves the right to withdraw this offer at any time.

Author

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Catheleyne van Erp

Head of Growth, Western Europe, Investments

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