In a bold move reflecting the intensifying divide over environmental, social, and governance (ESG) investing, one of the UK’s most significant pension funds has withdrawn a staggering £28 billion from State Street. The decision by The People’s Pension underscores mounting frustration among long-term investors as prominent US asset managers scale back their ESG commitments.
Following a thorough review of its responsible investment policy, the £33bn pension scheme reallocated its assets—awarding a £20bn developed market equity mandate to Amundi and shifting £8bn in fixed-income investments to Invesco. Both firms were selected for their alignment with ESG principles. Once the sole manager of the fund’s assets, State Street has been left with just £5bn under its management.
By selecting Amundi and Invesco, we have prioritized sustainability, active stewardship, and long-term value creation,” said Mark Condron, chair of trustees for The People’s Pension, which aimed to “balance strong financial performance with responsible investment principles.”
“The big theme has been an increasing difference in the positioning of US versus European asset managers. That’s a huge story,” said Dan Mikulskis, chief investment officer of People’s Partnership, which operates The People’s Pension.
This shift comes against the backdrop of rising political pressure in the US, where asset managers have been criticized by right-wing groups opposing corporate initiatives to combat climate change and enhance diversity. The backlash intensified after Donald Trump’s election, prompting many investment firms to soften their ESG stance.
However, The People’s Pension remains resolute. It aims to align its entire portfolio with the global 1.5°C climate target, a goal that has become increasingly central to its investment strategy. Mikulskis, a key figure in the fund’s decision-making, noted that the differences between asset managers have become increasingly stark, making it easier to identify those committed to responsible investing.
The withdrawal follows criticism from ShareAction, a responsible investment campaign group that recently slammed State Street, BlackRock, Fidelity Investments, and Vanguard for a “worrying retreat from ambition.” Together, these firms manage an eye-watering $23 trillion in assets. Last year, they collectively supported just 7% of shareholder resolutions on ESG matters.
Amundi emphasized that its ESG commitment was a “key factor” in securing the £20bn mandate, focusing on climate-aligned investments. Meanwhile, Invesco will oversee the £8bn bond portfolio, ensuring net-zero alignment through ESG screening, active engagement, and climate risk assessment.
“We look forward to continuing our work with The People’s Pension on the remaining mandates,” the company added.
State Street, for its part, is recalibrating. The firm plans to expand its presence in the UK’s defined contribution pension market. It has a “strong pipeline” of new business opportunities this year.
Meanwhile, pressure is mounting on asset managers to engage actively with companies on climate risk. A coalition of 26 financial institutions and pension funds recently urged their investment managers to push for stronger climate accountability. Major US pension giants, including the $536bn California Public Employees’ Retirement System (Calpers) and The California State Teachers’ Retirement System (£353bn in assets), have also signaled concern over the potential dilution of climate reporting standards.
Calpers’ CEO, Marcie Frost, voiced alarm after the US Securities and Exchange Commission (SEC) indicated it would no longer defend its climate disclosure rule in court. But despite regulatory uncertainty, significant pension funds have vowed to hold companies accountable, ensuring climate risk remains at the forefront of corporate governance.
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