Majority of investors say climate change is ‘material’ risk, but green investments remain low

A survey of 44 asset owners and 46 asset managers with assets of more than $12 trillion has revealed that a majority now view climate change issues as a material investment risk/opportunity across their investment portfolio, but that the level of assets being committed to dedicated climate change strategies remains low. The survey, conducted by Mercer on behalf of the Institutional Investors Group on Climate Change (IIGCC), the North American Investor Network on Climate Risk (INCR) and Australia/New Zealand Investor Group on Climate Change (IGCC), said 87% of asset managers and 98% of asset owners (pension funds, etc) said climate change data was important to their investment decisions. However, the investors indicated that total allocation to thematic environmental investments was still relatively small, representing on average just 0.3% of the total respondents’ assets under management (approximately $63bn of the $12trillion total).Nonetheless, half of the investors surveyed said they already invest in green funds, with a further 15% of asset managers and 45% of asset owners saying they would consider an allocation over the next few years. The report noted a similar disparity in terms of asset manager selection on climate change issues. While 77% of asset owners say they consider whether potential fund managers integrate climate change in their investment processes, only 18% have a formal process to assess their prospective managers’ climate efforts.
More broadly, the survey found that climate issues were becoming more strategic at investment firms with a majority saying that responsibility for climate change now resided at board level. More than 80% of asset managers and 57% of asset owners said they make specific reference to climate change risk in their investment policy.
Link to survey report