By Joel Kranc
The investment landscape under the second Trump presidency has seen dramatic shifts from the past few years. For institutional investors, investments made under the guise of ESG and/or sustainability have changed and, in many ways, are moving away from those ideals. Shortly after the election, President Trump began the process of pulling the U.S. out of the Paris Agreement, promised to accelerate fossil fuel projects, and declared an energy emergency.
“We will be a rich nation again,” he said in his inaugural address. “And it is that liquid gold under our feet that will help to do it.”
The effects are palpable within the institutional investment community. BlackRock, one of the world’s largest institutional investment and infrastructure companies, told the press it would leave the Net Zero Asset Managers initiative, which is committed to achieving net-zero portfolios by 2050 or earlier across all assets under management. The Net Zero Asset Managers initiative has more than 300 signatories with more than $57 trillion in assets under management.
Earlier this spring, Canada Pension Plan (CPP) Investments, the investment arm for the Canada Pension Plan, with more than C$714 billion in assets, has also dropped a net-zero target by 2050 for carbon emissions. In its annual report, CPP Investments said legal developments have introduced new considerations around how net zero can be interpreted.
John Graham, chief executive of CPP Investments, has said in the press that the fund continues to believe in the need to incorporate sustainability in how it manages its portfolio.
“We think it is really important to incorporate climate and incorporate sustainability into the portfolio when we take a long-term perspective and as a long-horizon investor,” he said. “Recent legal developments in Canada have introduced, kind of, new considerations around how net-zero commitments are interpreted, so that’s caused us to change a little bit how we talk about it, but nothing’s changed on what we’re actually doing.”
Within its annual report, the fund said: “Forcing alignment with rigid milestones could lead to investment decisions that are misaligned with our investment strategy. To avoid that risk – and to remain focused on delivering results, not managing legal uncertainty – we have made a considered decision to no longer maintain a net-zero by 2050 commitment.”
This is a stark turnaround from 2022, when CPP Investments committed to making its operations and portfolio of investments fully net zero by mid-century.
In its quarterly report, CPPIB Watch: A quarterly update on CPPIB-owned fossil fuel companies (April – June 2025), SHIFT: Action for Pension Wealth and Planet Health, explained that CPP Investments’ net-zero commitment “was never credible anyway,” and “the writing was on the wall for [its] abandonment of its net zero commitment.”
And it doesn’t stop there. Many banks, such as BMO, TD Bank and CIBC have also gone back on climate commitments this year, saying they were leaving the Net-Zero Banking Alliance.
Not Dead, Just Delayed
Net-zero is not completely dead within the financial services sector. One major pension fund in Canada that did not abandon the strategy: the Caisse de depot et placement du Quebec (CDPQ).
SHIFT says that CDPQ has offered an elegant example of how other pension funds can confidently proceed with climate strategies, secure in the knowledge that the strategies are credible and aligned with fiduciary duty. “It’s another urgent reminder for pension managers who have failed to lay out a plan to rapidly align their portfolios with a safe climate while decarbonizing the real economy.”
SHIFT further states, that “CDPQ’s updated climate strategy maintains CDPQ’s investment exclusion on coal and oil extraction and refining. It also identifies sectors that have viable, profitable decarbonization pathways, includes clear criteria for companies that are not aligned with net-zero by 2050, and incorporates a “Do No Significant Harm” principle that prevents investments from undermining climate mitigation, causing environmental or social harms, or locking-in high-emission activities.”
In Europe, Robeco’s 2025 Global Climate Investing Survey shows that 56% of global investors expect net-zero momentum to resume after U.S. leadership changes, and that European and Asia-Pacific investors remain more committed to climate investing than North American counterparts.
In the near term, 59% of respondents are pausing climate-exposed investments in the U.S. until the policy direction becomes clearer. As a result, 58% of European and 62% of Asia-Pacific investors plan to shift capital outside the U.S. into renewables, transitioning companies, and climate solutions.
That leaves the overall picture divided by regional lines, with North American investors mostly in one camp, and most of the rest of the world in another. If or when policy becomes clearer, a more unified global investment strategy may develop. Until then, institutional investors are following the ever-changing policy developments as they emerge from Washington.
