Stockholm (NordSIP) – The potential implications of US managers’ response to the anti-ESG backlash in their home nation were brought to light today 27 February 2025 with the announcement by one of the United Kingdom’s (UK) largest pension schemes of the withdrawal of more than $35 billion worth of assets from State Street.
The People’s Pension is one of the UK’s largest independent master trusts, serving nearly seven million pension savers and more than 100,000 employers. While State Street stands to retain just over $6 billion under management, it had previously been solely responsible for the People’s Pension’s entire $41.7 billion portfolio.
While the decision may have been partly driven by a need for diversification following the fund’s rapid growth, the transfer of more than $25 billion to Amundi and $10 billion to Invesco is largely due to these firms’ sustainability credentials. Dan Mikulskis, Chief Investment Officer at People’s Partnership, explains: “As one of the fastest growing asset owners in the UK, we have a responsibility to deliver strong, sustainable returns for our members and a best-in-class investment strategy. Both managers bring exceptional expertise and share our commitment to responsible investment, which is central to our approach.”
US managers’ ESG stance may cause European asset haemorrhage
As reported in NordSIP last week, State Street is one of the four largest US managers that have demonstrably withdrawn from ESG-related activities over the last four years. Analysis by NGO ShareAction of its voting record, along with those of BlackRock, Fidelity Investments, and Vanguard, reveals a sharp drop in support from these large asset managers of social or environmental shareholder proposals since 2021. This has coincided with the withdrawal of North American managers from collaborative sustainability initiatives like Climate Action 100+ and the Net Zero Asset Managers initiative (NZAM).
Amundi will be responsible for managing a passive global developed markets equity portfolio focused on five regions, which will incorporate climate-focused indices. Invesco will handle a fixed income mandate including sovereign bonds, investment-grade credit, and high-yield bonds across the UK, US, Europe and Emerging Markets. Invesco was able to offer ESG-integration and issuer engagement practices that align with the People’s Pension’s climate commitments. The pension scheme has also set up a new segregated account structure for these assets with its custodian that affords more control, transparency, and flexibility.
With Sweden’s $138 billion AP7 reportedly reconsidering its large global equity mandate with BlackRock over sustainability-related concerns, the decisive move by the People’s Pension should send a strong signal to North American asset managers that there is a delicate balancing act to perform between European asset owners’ expectations and the prevailing political wind in the United States. Mark Condron, Chair of Trustees for The People’s Pension, said: “These appointments highlight The People’s Pension’s broader mission to balance strong financial performance with responsible investment principles. By selecting Amundi and Invesco, we have chosen to prioritise sustainability, active stewardship, and long-term value creation for our near seven million members.”
