Fraser Weir: The gap between ESG ambition and execution is widening
There is a growing disconnect between sustainability rhetoric and reality, with overall ESG progress stalling across the UK fiduciary management (FM) market, latest research by XPS Group finds.
The firm's Fiduciary Manager ESG Integration Survey 2025 – covering 14 FMs representing over £300bn in assets – found that, while sustainability is widely referenced, implementation across the market "remains inconsistent".
The survey – which rated rates FMs as green, amber or red across five key areas – found that only 21% of fiduciary managers were rated green in 2025, down from 38% in 2024 – a 17-point decline.
It said that, while 57% of fiduciary managers influence voting activities, escalation from engagement to divestment remains inconsistent.
And it noted 36% of managers do not include all ESG ratings for underlying funds in standard client reporting – a move that limits trustee oversight.
XPS said 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 said this gap between rhetoric and reality increases reputational and regulatory risks for pension schemes that are relying on fiduciary managers to deliver on net-zero commitments – adding that trustees needed to look beyond headline targets and ask for clear evidence of how portfolios are being stress tested and adjusted in practice.
The firm said stewardship practices also required closer scrutiny. The research found that, although many managers say they are consistently engaging with companies, few demonstrate a structured escalation process and measurable outcomes are rare.
XPS said trustees should push for greater transparency on how engagement is escalated and must insist on clarity around these routes and voting influence to ensure accountability.
The consultancy said reporting quality remained another key concern – noting that, while leading managers now offer clear dashboard-led, scheme-specific ESG reporting, quality across the market "varies widely". It said that, without comprehensive reporting, including ESG ratings for underlying funds, trustees cannot effectively monitor, challenge, or escalate.
XPS said trustees needed to move beyond high-level policy statements and actively challenge fiduciary managers to demonstrate ESG integration in practice. It said tailoring ESG approaches, demanding actionable reporting, and benchmarking against market leaders were "essential steps" to safeguard member interests and meet regulatory expectations.
XPS Group head of FM research Fraser Weir said: "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."
