Governance and shareholder rights overtake climate transition as the top priority for pension funds
Pension funds made up 45 percent of the 402 asset owners who reported that sustainable investment practice has returned to levels last recorded in 2022, with 84 percent now taking sustainability considerations into account in their investment strategy in one form or another.
That is 11 percentage points higher than 2025 and two points below the survey's 2022 peak, according to the ninth annual Sustainable Investment Asset Owner Survey, published by FTSE Russell in its 2026 global asset owner research.
A further 15 percent are evaluating whether to do so.
Respondents came from 24 countries across three regions, split EMEA at 40 percent, Asia Pacific at 30 percent and North America at 30 percent.
Alongside pension funds, insurance companies and government-related and sovereign wealth funds each accounted for 15 percent, endowments, foundations and family offices for 18 percent, and 7 percent were classified as other.
All were senior members of sustainability, investment or management teams.
Around 22 percent reported assets under management of US$100bn or more.
Stephanie Maier, global head of sustainable investment at FTSE Russell, said in the release that asset owners continue to embed sustainability factors more deeply into investment decisions despite market volatility and policy uncertainty.
She said this reflects recognition that the factors "can materially affect risk and returns," and that sustainability is now "a routine element of portfolio construction and risk management."
Eighty-five percent expect their implementation or use of sustainable investment products to increase over the next one to three years.
The remaining 15 percent expect it to stay the same, and no respondents anticipated a decline.
Governance, tax and shareholder rights was the most commonly cited priority sustainability issue at 32 percent, up from 18 percent in 2025.
The report attributes the rise to investor concerns about governance standards among some of the emerging giants of the AI revolution, as well as developments affecting shareholder rights in some jurisdictions.
Climate transition followed at 31 percent, then social, human rights and human capital at 29 percent.
Climate physical and adaptation risk was cited by 26 percent, against 19 percent in 2025.
The 2026 edition asked about emerging issues for the first time.
Health and healthcare-related risk was named a priority by 25 percent, technology and AI-related risk by 24 percent, and food-related risk by 19 percent.
Between 13 and 15 percent said their organisation is not yet responding to each of those themes.
Concern with the investment impact of climate risk, rated at 7 or above on a scale of 0 to 10, reached 86 percent, compared with 85 percent in 2025.
One quarter rated their concern at 10 out of 10, up from 11 percent.
Fifty-two percent said they consider climate risk in strategic asset allocation, against 36 percent in 2025.
Concern about the quality or consistency of corporate reporting and disclosures rose to 33 percent from 31 percent, making it the most cited barrier to further adoption.
The report links this to the levelling off of sustainability-related corporate reporting rates and changes to regulatory requirements in both Europe and North America.
Greenwashing reputational risk fell to 22 percent from 37 percent, and concerns about ESG data availability and the use of estimated data to 25 percent from 36 percent.
Costs were cited by 25 percent, up from 17 percent, though the report notes cost pressures are not unique to sustainable investment.
Regulatory or fiduciary constraints were cited by 27 percent, against 28 percent, while 36 percent now consider regulation a potential enabler, up from 22 percent.
Fifty-one percent apply sustainability considerations to more than 50 percent of their assets, up from 26 percent.
Eleven percent apply them across the entire portfolio and 23 percent to 80 percent or more.
In 2025, no respondent reported applying them beyond 80 percent of overall assets.
Use of custom sustainable investment indices in passive allocations rose to 35 percent from 21 percent.
Implementation or consideration in externally managed passive portfolios reached 53 percent, up from 48 percent, while externally managed active fell to 70 percent from 80 percent.
Thirty percent favour divestment from carbon-intensive assets such as oil, gas and mining stocks, up from 21 percent, while 60 percent favour engagement, down from 67 percent.
A further 10 percent are open to either.
