The third annual Global Investors Survey on Climate Change polled over 80 major investors and found that the majority of investors have retained, and in many cases advanced, their commitment to addressing climate change in their investment activities. 53% of asset managers said that they decided to divest or not invest in listed equities based on climate change concerns up from 23% in 2012 and 9% in 2011.
One European equity manager who took part in the survey is quoted as saying: “We divested from a company when we came to the conclusion that they were no longer part of the transition to a low-carbon economy as their portfolio of carbon-based fuels/assets began to rise materially.”
Meanwhile, a majority of asset owners (69%) also said that climate change integration influenced their fund manager decisions in 2012. This was a marked increased on the 43% who declared the same last year. An increasing number of asset owners (63%) say they are monitoring their existing asset managers on how they integrate climate change into their investment processes. This is a 10% increase on last year. A majority have conducted formal or informal climate risk assessments of their portfolios.
Despite encouraging signs of progress in the assessment of both low carbon and emission intensive exposures, investors face a number of challenges. These include a lack of clarity on which investments should be measured; patchy carbon signals; limited data, particularly for fixed interest investments and inadequate company disclosures.
Stephanie Pfeifer, chief executive of the European Institutional Investors Group on Climate Change, said: "There are some extremely encouraging findings in this year’s report. Despite the wider economic challenges, climate change is firmly established as a material risk for investors, and their assessment of climate risk is shifting investment decisions. However, investors still face many challenges, not least the on-going policy uncertainty which continues to make measuring long term climate risk and emissions exposure difficult. While clear policy signals do much to help investors measure this risk, the report shows that investors are making progress in the absence of these signals and should continue to do so.”
Chris Davis, director of Investor Programs at Ceres, a US-based sustainability group that coordinates the Investor Network on Climate Risk (INCR), adds: “We are pleased that global investors are continuing to prioritize climate change as a material investment risk and source of investment opportunity. But much work remains to be done, especially in the US, to fully integrate climate risk into investment decision-making, and to advance public policies that will accelerate more low carbon investment.”
The European Institutional Investors Group on Climate Change, the North American Investor Network on Climate Risk, the Australia/New Zealand Investor Group on Climate Change and the Asia Investor Group on Climate Change published the report which was conducted by Mercer.