ESG+ Newsletter – 23 April 2026
In this week’s newsletter, we explore the widening divide between Europe and the US in approaches to ESG investing, as political pressures reshape market behaviour and investor expectations. We also examine the slowdown in ESG-related shareholder activism in the US and consider what this signals for corporate accountability. Turning to the UK, we look at the changing landscape of executive pay. Elsewhere, US states are racing to secure clean energy subsidies ahead of looming deadlines, while growing concerns around climate risk are raising questions about the long-term insurability of critical infrastructure. |
This week’s poll
|
Last week’s poll
Sustainable investing divide widens between Europe and the US
US asset managers are suffering the consequences of the US’s anti-ESG political pressure, according to the Financial Times. The integration of ESG factors remains critical for European fund managers who recognise that climate risk in particular can have an impact on financial and operational risk. However, in the US some pension funds are pushing for increased investments in fossil fuel companies and have withdrawn money from asset managers for considering ESG factors when investing. Navigating different regulations and attitudes to ESG globally combined with a patchwork of reporting requirements, is an increasing challenge for investment firms.
With the term ESG increasingly polarised, Professor Alex Edmans of London Business School suggests rather than viewing ESG as a separate label, it should simply be widely adopted in investment practices as “critical to long-term value”. With political rhetoric shifting over time, opportunities and risks of ESG investing will remain relevant over time says Carlota Esguevillas, head of sustainability investing at fund group Edentree.
US ESG shareholder resolutions slows following pushback from Trump administration
A study conducted by Proxy Impact, an advocacy and proxy voting service for sustainable investors, has found shareholders have filed about half as many proposals promoting ESG themes at US companies this proxy season compared to last. Proposals include urging companies to take steps like reporting more about their carbon emissions or workforce diversity, and whilst most are non-binding, they have the potential to drive significant corporate changes. Proxy Impact’s study attributed the decline in filings this year partly to a new willingness of company executives to bargain behind closed doors to avoid public controversies. It also calls out new rules from Washington making it harder for activists to prevail in corporate contests. Commenting on the report, Reuters notes that support for environmental and social measures has fallen in recent years. Whilst big investors argue that companies have already made significant reforms, critics suggest that executives have abandoned diversity and climate ambitions. With major shareholder meetings now underway, hot topics this year include rules for data centres being built for artificial intelligence and items pressing companies for more lobbying disclosure, a shift away from the ESG debate, which ruled proxy meetings in the early 2020s. |
Developments in UK executive remuneration
New research reported by the Financial Times suggests that FTSE 100 CEOs rumination packages have increased. Additionally, boards have also reduced the prominence of ESG targets in remuneration structures, reflecting the broader market divergence on ESG issues. Based on a sample of 55 companies that have already published their annual reports, the analysis found that executive pay packages increased by 18% in the past year. The increase in total remuneration in 2025 was largely attributable to remuneration committees providing larger bonus opportunities, with achievement levels remaining relatively constant year on year. Looking forward, 16 of these companies are proposing significant increases for incentive payments in 2026, with the median increase equivalent to 200% of salary, in line with UK investors becoming more receptive to substantial pay increases when supported by compelling rationales. On the sustainability front, the research also found that 20 companies had reduced the weighting of ESG metrics in their incentive schemes and 11 had removed at least one ESG metric.
Several factors may explain this dual trend. If a company increases its CEO’s pay package, it should arguably make it more difficult to achieve the new maximum. The demand for ESG criteria from investors may also have weakened, especially for companies with more US investors. More broadly, ESG criteria were often introduced to drive business transformation. As ESG strategies and practices become more embedded in the business, remuneration committees will recalibrate remuneration criteria to align with evolving business priorities. As the UK AGM season progresses, we expect that investors will continue to closely monitor company disclosures regarding significant pay increases and reductions in the use of ESG criteria.
States rush to build clean energy projects to tap expiring incentives
Several US states are accelerating renewable energy development to capture expiring federal tax credits before a critical 4 July 2026, deadline, according to a recent Bloomberg article. Projects that begin construction by this date and complete within four years qualify for a 30% investment tax credit – among the last Biden-era clean energy incentives to survive recent policy changes. Several US states are expediting approvals to secure these subsidies, which “can help lower power prices as soaring electricity bills become a top issue in the 2026 elections and data centres drive up energy demand,” per Bloomberg. California, for example, has mandated an additional 6,000 megawatts of clean energy capacity by 2032, while Colorado approved 3,200 megawatts of solar, wind, and battery projects expected to realise approximately $5 billion in tax credits, reducing project costs by 39%. Utilities and developers recognise these credits as essential for customer affordability and meeting state carbon-neutrality goals. However, supply chain disruptions and permitting challenges may affect whether projects are complete within the four-year window, with final eligibility determined by the IRS. |
The growing risk of uninsurable infrastructure
Climate change is increasing the risk that critical infrastructure could become uninsurable, particularly in vulnerable regions, Reuters reports. While most discussion has focused on residential insurance, infrastructure projects depend just as heavily on insurance to secure financing. A recent MSCI report, based on input from over 50 global insurers, found that 96% are concerned about long-term insurability. Climate-related disasters are intensifying, with insured losses exceeding $100 billion annually for six consecutive years, making risks more volatile and costly. At the same time, insurers are withdrawing from high-risk areas, concentrating exposure among fewer providers and driving up premiums. Government support, often used as a safety net, is also becoming less certain as fiscal pressures grow. Without reliable insurance, investment may stall, infrastructure could deteriorate, and broader economic stability would be threatened.
In response, insurers are adopting more advanced risk modelling, using detailed climate and geospatial data to better understand exposure. New products such as parametric insurance – where payouts are triggered by predefined events like extreme weather, are also emerging. Insurers are also expanding advisory services to help clients reduce risks and maintain coverage. However, these efforts alone are not enough. Stronger collaboration between governments and the private sector is essential, including public-private partnerships, targeted financial backstops, and greater investment in resilience, particularly to protect long-term economic activity in climate-vulnerable regions
ICYMI
- ECB board member Frank Elderson has warned Europe to cut reliance on fossil fuel import, arguing that clean energy transition is only way to safeguard the economy from price shocks, according to Business Green.
- Barrons has ranked the 10 Most Sustainable Companies of 2026, ranking US companies based on factors including the environment, workforce, customers, communities, and governance.
| The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
©2026 FTI Consulting, Inc. All rights reserved. www.fticonsulting.com |
