Sustainability Snippets – June 2026

Regulation, market practice and changing investor priorities continue to shape the sustainability landscape. With this, expectations for asset owners, investment managers and companies are also changing. In our monthly sustainability blog, we focus on the developments we believe have the greatest relevance for investors. 

London Calling cooking

At the start of June, the World Meteorological Organisation (WMO) warned that El Niño conditions (the periodic warming of surface waters in the tropical Pacific) were developing and likely to influence global temperature and rainfall patterns in the coming months. While El Niño primarily affects regions in and around the Pacific Ocean, Europe still suffered a devastating June heatwave as a heat dome (an atmospheric phenomenon where high pressure traps a mass of hot air beneath it) formed.

Temperatures in England reached 37.7°C, prompting the Met Office to issue only the second red extreme heat warning in its history. France experienced similar extremes, with temperatures exceeding 44°C. The heat placed significant strain on infrastructure, causing a transformer failure that left tens of thousands of homes without power. The impacts were also felt on public health, with deaths in France rising by nearly 30% compared with the previous week. Prime Minister Sébastien Lecornu also reported at least 40 heatwave-related drownings across the country. These examples are a sobering reminder that extreme conditions do not just strain infrastructure – they affect people directly. These are no longer abstract risks or future scenarios; they are unfolding in real time across the critical systems relied upon every day.

Much of the focus remains on the transition to a low-carbon economy, but adaptation, system resilience and human impacts warrant equal attention. Asset owners should ensure their managers are actively assessing and managing physical climate risks, while using stewardship activities to advocate for the structural changes needed to build resilience. Investors can also play a direct role by engaging policymakers and allocating capital to a wide range of climate solutions.

Carbon budgets: the empire cuts back

UK Members of Parliament have approved the draft Carbon Budget Order 2026, setting the UK’s seventh carbon budget for 2038 to 2042. Following advice from the Climate Change Committee, the budget requires emissions to fall by around 87% from 1990 levels, making it the most ambitious carbon reduction target yet. The recommended pathway relies primarily on domestic emissions reductions rather than international carbon offsets, placing the emphasis on action within the UK economy. Achieving this will require significant structural changes across the economy, including the electrification of heating and transport, the decarbonisation of heavy industry and increased land-based carbon removals.

The seventh carbon budget provides a clearer signal of the UK’s long-term transition pathway. Asset owners should consider how an accelerated real-economy transition could affect portfolio risks and opportunities. Climate scenario analysis and engagement with asset managers can help assess whether portfolios are appropriately positioned for these changes.

From proxy advice to prompt advice

Artificial intelligence (AI) has the potential to transform stewardship for asset owners by autonomously analysing corporate governance proposals at scale and helping investors make more informed voting decisions aligned with their sustainability objectives.

As these capabilities develop, they are beginning to challenge established stewardship practices. Financial technology platform Tumelo published its ‘AI in stewardship’ framework, highlighting growing pressure on the traditional proxy advisory model as asset managers seek to bring research and decision-making in-house to improve accountability and better align voting decisions with their own stewardship policies.

However, deploying AI in proxy voting presents a double-edged sword. While it could unlock significant operational efficiencies, a rapid shift towards automated systems risks sidelining the nuanced, human judgment that effective stewardship requires.

Asset owners should engage with their managers on how AI is being integrated into stewardship activities, including proxy voting, company research and engagement. Particular attention should be paid to governance and oversight arrangements, ensuring that the use of AI strengthens accountability and transparency rather than obscuring decision-making.

If you’d like to discuss these developments or explore how we can support you, please get in touch. 

This blog is based upon our understanding of events as at the date of publication. It is a general summary of topical matters and should not be regarded as financial advice. It should not be considered a substitute for professional advice on specific circumstances and objectives. Where this blog refers to legal matters please note that Hymans Robertson LLP is not qualified to provide legal opinion and therefore you may wish to obtain independent legal advice to consider any relevant law and/or regulation. Please read our Terms of Use - Hymans Robertson.