A recent poll conducted by XPS Group at their 2025 Fund Manager Conference revealed that over half of the attendees believe the growing resistance to Environmental, Social, and Governance (ESG) initiatives in the United States will have a ripple effect on European markets. Out of 90 participants, 52.2% foresee the US pushback on ESG and climate change policies spilling over into Europe, particularly following the withdrawal of managers from the Net Zero Asset Managers Initiative, which was largely driven by legal threats faced by US-based firms.
Alex Quant, Head of ESG Research at XPS Group, commented: “We’re observing a shift in responsibility towards asset owners, who are increasingly expected to provide clear instructions to asset managers on sustainability preferences. This is particularly true for asset managers with US exposure, who are finding it difficult to adopt unified positions on issues like climate change due to the growing litigation risks in the US. However, it appears that the attitudes of asset owners, particularly institutional investors, remain unchanged, with many in the UK and Europe having already set their own Net Zero targets. As a result, we expect that asset managers retreating from ESG commitments may see a rotation towards those whose policies are better aligned with the values of these investors.”
The future of ESG sentiment in European markets largely hinges on government action, according to the poll results. The experience of US-based managers underscores the need for clear, top-down regulatory requirements for both companies and investors. For Europe to avoid a similar pushback, governments will need to continue progressing with policies that support national ESG and climate commitments.
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