There is a growing “disconnect” between the rhetoric on sustainability and concrete action among fiduciary managers, according to the latest research from XPS Group.
It found that just 21 per cent of fiduciary managers are now rated as ‘green’ in its sustainability ratings in 2025 — a 17 per cent decline on the previous year’s survey.
The survey covers 14 fiduciary managers representing over £300bn in assets, and captures more than 90 per cent of the market. XPS Group says that while sustainability is widely referenced in fiduciary manager’s approaches, implementation across the market remains inconsistent.
These ratings score fiduciary manages on a number of key areas. Climate change practices saw the sharpest decline, with fewer managers demonstrating adequate assessment of climate risks or preparation of portfolios for the transition to a low-carbon economy.
It adds this gap between rhetoric and reality increases reputational and regulatory risks for pension schemes, relying on fiduciary managers to deliver on net-zero commitments. XPS says that trustees need to look beyond headline targets and ask for clear evidence of how portfolios are being stress tested and adjusted in practice.
Stewardship practices also require closer scrutiny. Although many managers say they are consistently engaging with companies, few demonstrate a structured escalation process and measurable outcomes are rare.
XPS adds that trustees need to push for greater transparency on how engagement is escalated and must insist on clarity around these routes and voting influence to ensure accountability.
Reporting quality remains another key concern. XPS Group says that while leading managers now offer clear dashboard-led, scheme-specific ESG reporting, quality across the market varies widely. Without comprehensive reporting, including ESG ratings for underlying funds, trustees cannot effectively monitor, challenge, or escalate.
Fraser Weir, head of FM research, XPS Group, says: “The gap between ESG ambition and execution is widening. Trustees can no longer rely on statements alone – they need evidence of integration, escalation, and impact. Oversight is critical to protect schemes from regulatory and reputational risk.”
He adds that this has clear implications for trustees: trustees should move beyond high-level policy statements and actively challenge fiduciary managers to demonstrate ESG integration in practice. Tailoring ESG approaches, demanding actionable reporting, and benchmarking against market leaders are essential steps to safeguard member interests and meet regulatory expectations.