Nesta pulls $247m mandate from Northern Trust over climate stance

UK research and innovation foundation Nesta Trust has transferred £120 million ($247 million) of assets from Northern Trust Asset Management to Amundi after the US manager withdrew from major global climate initiatives, highlighting the growing commercial consequences of fund managers stepping back from climate commitments.

The £120 million ($247m) passive global equities portfolio represents more than a quarter of Nesta Trust's £420 million endowment ($688.5m), which funds the work of innovation foundation Nesta. The mandate was transferred to Amundi following Northern Trust's exit from the Net Zero Asset Managers Initiative (NZAMI) and Climate Action 100+.

Nesta Trust chief investment officer Jenny Segal said the decision reflected the trust's belief that climate stewardship is central to long-term investment outcomes.

"The economic risks of the climate crisis mean it is the duty of any asset manager to ensure their investments support climate action to protect the portfolio's growth," Segal said.

"Asset managers that step back from climate action initiatives risk compromising their stewardship and so we took the decision that Amundi was a better home for Nesta's global equity investments."

The move follows similar decisions by major institutional investors, including the New York City Pension Fund and several European pension funds, which have shifted mandates away from US managers after concerns over weakened climate engagement.

Amundi UK chief executive Eric Bramoullé said responsible investing remained central to the firm's strategy.

"Clients are increasingly seeking to ensure that their assets are invested in a way that reflects their responsible investment commitments and supports the transition to a more sustainable economic system," Bramoullé said.

He added that stewardship, including company engagement and proxy voting, remained among the most effective tools investors have to support the transition to a lower-carbon economy while delivering long-term returns.

The Nesta Trust's investment committee already excludes investments in fossil fuels, tobacco and controversial weapons, while using active stewardship across its public equities, property and loan portfolios. The trust has also joined Investors for Purpose, a coalition of asset owners focused on responsible investment.

Investors for Purpose chief executive Charlotte O'Leary said the decision should prompt a broader industry discussion about how fund managers balance political pressures with climate risk management.

"Climate risk is investment risk, and the direction of travel matters," O'Leary said.