UK Hedge Funds Push Back Against Planned Climate Transition Requirements

The London-based Alternative Investment Management Association (AIMA), which represents firms such as Bridgewater Associates, Millennium Management, and Man Group, has voiced concerns about the proposed regulation that would require financial firms to publish climate transition plans. AIMA argues that the rule would inappropriately force hedge funds with short-term investment strategies to make projections tied to long-term climate targets.

“If a fund’s investment horizon is relatively near term, then it might not be meaningful to have a plan that goes out to 2050,” Adam Jacobs-Dean, global head of markets at AIMA, said in an interview cited by Bloomberg. He noted that many funds trade in financial instruments—like interest rate derivatives—that have little direct impact on the broader economy or real-world emissions.

The UK government’s push for stricter climate reporting stems from a 2024 court ruling that found its existing net-zero policies insufficient. In response, the government is preparing a sustainable finance package aimed at strengthening its climate framework. Energy Secretary Ed Miliband has described transition plans as “crucial” for managing both risks and opportunities in the shift to a low-carbon economy, per Bloomberg.

Read more: EU Lawmakers Back Sweeping Cuts to Sustainability Rules After Member State Pressure

A spokesperson for the Department for Energy Security and Net Zero told Bloomberg that an update on the regulations will be released “in due course,” adding that the government intends to ensure the measures are “proportionate and pro-growth.”

If implemented, the requirements would cover all UK-regulated banks, insurers, pension funds, and investment managers, including subsidiaries of foreign firms, as well as companies listed on the FTSE 100 Index. The Institutional Investors Group on Climate Change—which represents asset managers overseeing about $75 trillion—is recommending a phased rollout starting with the largest entities, according to Bloomberg.

Hedge funds already appear set to avoid similar obligations in the European Union, after AIMA successfully argued that the EU’s Corporate Sustainability Reporting Directive would impose excessive and duplicative reporting burdens. Europe is expected to finalize amendments to its environmental, social, and governance (ESG) framework in early 2026.

Jacobs-Dean emphasized that AIMA is “not opposed” to climate action, telling Bloomberg that the group’s goal is to ensure that any regulatory approach “identifies what is likely to be effective” without imposing disproportionate requirements on hedge funds.

Source: Bloomberg