Emission penalties in shipping, banks’ climate pullouts & SDG blind spots

Ready for the latest sustainability and impact news? This edition of Impact Insights dives into the IMO’s move to fine high-emission shipping, a growing political backlash against net-zero commitments in the banking sector, and fresh criticism of asset managers falling short on ESG voting. Plus: new trends in private equity’s SDG focus reveal rising areas — and areas left behind.

■ IMO introduces financial penalties for failure to meet emission reduction targets

The shipping sector is set to become the first industry with internationally mandated emissions reduction targets when the UN’s International Maritime Organization (IMO) adopts the Net-Zero Framework. Under the agreement, owners of large vessels engaged in international trade must significantly increase their use of lower-carbon fuels or face a penalty of up to USD 380 per tonne of CO₂ emitted from fuel combustion. Penalty revenues will feed into a “Net Zero fund” to scale up green fuel alternatives and support developing countries in their transition. The goal is to avoid leaving behind vulnerable nations and ensure that all regions can participate in the shift to a cleaner maritime industry. The transition fund is also designed to help address potential economic disruptions caused by the new rules, particularly for small island states and least developed countries that depend on maritime trade. The regulation is scheduled for formal adoption in October 2025, with enforcement expected to begin in 2027.

■ The US-driven ESG backlash resounds in the banking sector

Several major U.S. banks have exited the Net Zero Banking Alliance (NZBA) in recent months, abandoning commitments to align lending, investment, and capital markets activities with net-zero emissions by 2050. Analysts cite Trumpism and a “hostile political climate” as key drivers, particularly for U.S. banks and banks with significant American exposure. Many European banks, by contrast, reaffirm their commitment to NZBA and associated emission reduction targets. Meanwhile, progressive banks like the Dutch Triodos argue that these departures present an opportunity to build a stronger “coalition of the willing” with stricter requirements, including clear targets for phasing out the most polluting sectors and rigorous monitoring of policy commitments.

Regardless of the rationale, banks’ commitment volatility raises concerns about broader management and board-level dedication to sustainability. One thing remains clear: banks and financial institutions are pivotal in the path to net zero. Through capital allocation, financial incentives, and lending, they hold immense power to drive—or stall—sustainability efforts. Financial institutions must lean into this responsibility, not step away from it. The stakes are too high, and the transition demands engagement throughout the financial system.

■ Major asset managers fall short on sustainability voting, new report finds

According to a new report by ShareAction, leading asset managers fail to support responsible investment resolutions, undermining global sustainability efforts. The fifth edition of Point of No Return ranks 76 of the largest players in the market, who together control over $80 trillion in assets under management, on whether they meet responsible investment standards. The research reveals that, despite public climate commitments, many major players, including BlackRock, Vanguard, and State Street, voted against or abstained from key ESG shareholder proposals in 2023. While asset managers might have responsible policies across a small number of their funds, the findings call into question their broader approach. ShareAction warns that this gap between rhetoric and action contributes to ongoing environmental and social harm and calls for regulators to introduce mandatory stewardship standards.

A few European asset managers are demonstrating robust, responsible investment policies and practices across all key themes: climate change, biodiversity, social issues, governance, and stewardship. Robeco has secured the top spot in the benchmark for the third consecutive year.

■ Health, hunger, and innovation lead SDG focus for private equity impact funds

Private equity impact funds are increasingly prioritizing SDGs related to Good Health (SDG 3), Zero Hunger (SDG 2), and Industry, Innovation & Infrastructure (SDG 9), according to a new analysis from Phenix Capital. These goals attract the largest share of commitments, even as macroeconomic headwinds have slowed new fund launches. According to the report, 39% of private equity impact funds target Good Health and Wellbeing as their main investment theme. Access to healthcare and unmet medical needs have the greatest number of funds dedicated to them, 281 and 286, respectively, out of 1459 private equity impact funds. Meanwhile, environmental SDGs such as Life Below Water (SDG 14) and Life on Land (SDG 15) remain underrepresented, with only 8% of impact funds dedicated to them, raising concerns about balance in impact investing. While recent interest rate cuts in Europe and the US have created a more favorable environment for deal-making, the report cautions that policy shifts, such as the US administration's withdrawal from the World Health Organization and the Paris climate accords, may pose challenges for impact investments in these sectors.