Investment consultants have made significant progress in embedding climate considerations into their recommendations in recent years, but expectations continue to increase, according to a new report.
The Investment Consultants Sustainability Working Group (ICSWG) has found that climate-related advisory capabilities, which were once viewed as aspirational, are now considered standard practice across the investment consulting industry.
The newly updated Climate Competency Guide was published this week and highlights a marked shift in expectations since its original release in 2021. It now reflects the significant progress made in how consultants integrate climate considerations into their advice.
“As the understanding of climate-related issues continues to evolve, it’s important that asset owners can effectively evaluate the capabilities of those giving them advice.”
Simon Jones, Hymans Robertson
Simon Jones, co-chair of the ICSWG and head of responsible investment at Hymans Robertson, said: “As the understanding of climate-related issues continues to evolve, it’s important that asset owners can effectively evaluate the capabilities of those giving them advice.
“Updating the framework to reflect changing expectations is therefore vital to ensure that evolving best practice continues to be integrated into advice. The input we have received from asset owners and other stakeholders has been critical to this process, and we hope the guide will remain a helpful and widely used resource.”
The report states that embedding climate risk into strategic asset allocation and providing detailed scenario analysis are now widely regarded as core services from investment consultants. It also sets out how asset owners can assess the climate competence of their consultants.
A broader definition of climate
The ICSWG’s report highlights that climate considerations are increasingly being integrated with broader environmental and social factors. Asset owners increasingly require advice that reflects the interconnected nature of sustainability risks and opportunities.
The report also emphasises the expanding role of investment consultants in helping asset owners respond to a fast-changing regulatory environment.
As disclosure requirements and stewardship expectations evolve, consultants are expected to provide more sophisticated, forward-looking guidance to ensure clients remain compliant and resilient.
In updating the guide, the ICSWG drew on feedback from a wide range of industry stakeholders, including Pensions UK, the Pensions Regulator, and the Trustee Sustainability Working Group. Their input helped shape a framework that reflects both current best practice and emerging expectations.
Helen Prior, workstream chair and client director at Mercer, said: “This guide provides examples of how investment consultants can demonstrate that their firm and staff have the expertise, tools and thought leadership to support asset owners when assessing climate-related risks and opportunities. We hope the refresh and fresh input from the trustee side helps to keep it relevant for asset owners in 2026 and beyond.”
