Real talk on climate: what investors can actually influence

I appreciated the "real talk" in the new LSE investor climate report, What can investors do about climate change?, from Tom Gosling, Hans-Christoph Hirt and Fernanda Gimenes.

Over the last decade, stewardship teams have put enormous amounts of resource, time and energy into climate-related engagement - rightly so.

But the report asks harder questions around what investors can actually influence, given the realities of policy, economics and fiduciary constraints.

Policy-led, not market-led

One of the central arguments is that climate transition is ultimately policy-led, not market-led. The authors frame it as a shift "from a market-led narrative to a policy-led one", with investor action "supporting and reinforcing, not substituting for governments".

That doesn't make stewardship less relevant.

But it does require a more grounded understanding of where engagement is genuinely effective, where incentives align, and where investor influence has limits.

Limitations-aware engagement

The sections on "limitations-aware engagement" were particularly interesting.

Not every engagement objective is commercially or practically realistic. Not every target translates into real-world outcomes. And not every stewardship activity creates meaningful impact.

There's a maturity in acknowledging that, especially in a market where teams are increasingly resource-constrained, while expectations around stewardship continue to grow.

Focus, not coverage

It seems obvious, but stewardship should be less about trying to engage on everything, and more about understanding:

• where leverage genuinely exists
• where policy determines incentives
• and where focused engagement can realistically influence outcomes

It also raises the bar for the quality of information and context underpinning stewardship decisions.

The full report is available from the LSE Financial Markets Group.