The Great Values Matching is coming to your pension fund
By Thanos Verousis
Professor of Sustainable Finance
BlackRock’s CEO, Larry Fink, must have breathed a sigh of relief recently when Texas removed the world’s largest asset manager from its divestment statute list. This blacklist consists of asset managers that boycott fossil fuels and inclusion to that list, according to Texas law, prohibits State public investment and pension funds from investing in them. Fixing this relationship may have taken over three years and a large swing of BlackRock’s policies from a “climate-first” to a “no-need-to-cry-over-spilled-milk” approach, but no harm done, not yet anyway.
Same week, different continent, Union Investment, one of Germany’s largest asset managers, has decided to divest from Exxon Mobil, citing “insufficient commitment” to climate targets by the American oil and gas company. What just happened?
These developments point to what I describe as the “Great Values Matching” in professional investments. This is, quite simply, the realisation, primarily by investors and subsequently by asset managers, that the exercise of fiduciary duty by asset managers is ultimately defined by the investors themselves. If investors, therefore, are willing to allocate part of their portfolio, including their pension fund portfolio, into policies that match their “values” over the pursuit of “value”, fund managers will be compelled to follow suit. Note that the “values” principle is pursued over and above any “value” principles, that is, the maximisation of profits, either short-term or long-term. The investor does not have to formulate an opinion on whether climate risk is investment risk, as Norges Bank Investment Management, Norway’s giant Sovereign Wealth Fund, recently asserted. The investor simply instructs the fund managers, voting with their feet or with their hands.
There is no better example of this than the case of State Street Global Advisors. In February 2025, The People’s Pension, a major UK pension fund, decided to withdraw £28 billion in savings from State Street, citing the firm’s retreat from ESG commitments. That was voting with their feet. Fast forward three months to May, and State Street launched a Sustainability Stewardship Service, giving existing investors the option to pursue sustainability-first engagement policies. That is voting with their hands.
The “Great Values Matching” is unfolding not in spite of the ESG backlash, but because of it. For several years, fund managers eagerly rode the ESG gravy train, where promises of doing good and doing well were used to attract investors. From their side, investors did not have to choose between the pursuit of “value” and the expression of “values”. The recent ESG backlash, however, has forced investors to reconsider where they stand, effectively enabling the “Great Values Matching” to develop.
Over the last two years, more and larger fund providers are empowering investors with “values-over-value” shareholder voting policies. BlackRock is one example. Vanguard is another. These policies may lead to more polarisation as the Texan example has demonstrated, but to borrow a popular phrase, “there is no plan B”.
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