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More asset owners/managers avoid investments over climate concerns, say investor groups

Findings from survey of investors with $14trn in assets

A greater number of both institutional asset owners and asset managers are either avoiding or divesting from investments over climate concerns, according to a new study from investor climate change groups.

“The number of asset owners reporting that climate concerns had led to an investment being avoided or a divestment being made increased to 23% in 2012 (from 9% in 2011),” said. And 53% of asset managers are now either avoiding or divesting due to climate change.
The findings come in the third annual Global Investor Survey on Climate Change commissioned by the Global Investor Coalition on Climate Change, conducted by consultants Mercer. The coalition, formed in December last year, comprises the European Institutional Investors Group on Climate Change (IIGCC), the North American Investor Network on Climate Risk (INCR), the Australia/New Zealand Investor Group on Climate Change (IGCC) and the Asia Investor Group on Climate Change (AIGCC).
The report is based on responses from 37 asset owners and 47 asset managers with collective assets totalling more than $14trn.
Respondent comments suggest that the decisions were taken in listed and unlisted equities, real estate and infrastructure portfolios.

A key finding of the 50-page report is that 40% of asset owners included climate change criteria in their Investment Management Agreements (IMAs) for new mandates.
“The results show that a majority of investors view climate change as a material risk and as a consequence have retained, and in many cases advanced, their commitment to addressing climate change in their investment activities,” the report states.Sixty-nine percent of asset owners said that climate change integration influenced their fund manager decisions in 2012 – up from 43% a year ago. And 63% are monitoring their existing asset managers on how they integrate climate change into their investment processes, a 10% rise. A majority have conducted formal or informal climate risk assessments of their portfolios.

The report also includes a series of 12 case studies of investor approaches to climate change. Investors featured include:

  • BT Financial Group /Advance (Australia)
  • LGS (Australia) Sustainable government bonds
  • PGGM (Netherlands)
  • Impax Asset Management (UK)
  • Cbus (Australia)
  • California State Teachers’ Retirement System (USA)
  • Church of England National Investing Bodies (UK)
  • Pax World Management (USA)
  • Unitarian Universalist Association (USA)
  • Prudential Investment Management (USA)
  • PRUPIM (UK)
  • Hastings Fund Management (Australia)