According to a recent survey* 71% of institutional (faith) investors claim that “climate change is at the centre of, or is a significant factor in” their investment policy – we see this in the work we do with many of you, and in the research we’ve done on investment policies. Further, some of you have made or are considering a net-zero by 2050 portfolio commitment: 37% in Europe, just 19% in North America.
BUT how are you pursuing a net-zero portfolio? What’s involved?
Dutch global asset manager Robeco is out with their third annual Global Climate Survey of institutional investors, and among the net zero commitment group, they find the following:
59% have setup measurement: “Developed a high-level understanding of the largest material impacts of our investment portfolio on carbon emissions”, and 42% have further calculated the total carbon footprint of the portfolio.
From there, the drop off in activity is considerable, with just 25% calculating the future carbon footprint based on their “investee companies” expectations for future carbon emissions, <25% employing corporate advocacy / engagement or exclusions to affect company behavior, and just 18% using tools such as carbon offsets and credits.
In turn, these investors are instead asking their asset managers to help in the following ways:
53% want their asset managers to offer low-carbon versions of (existing) funds, while 52% want them to offer more decarbonization-focused impact investment funds
Of course, first “know thyself” (i.e. measurement of one’s own portfolios), then know where you want to go (and are currently going), then employ tools to get there. Based on this survey, those who’ve committed have made progress on the first step, but much work remains to be done, and they’re expecting more help from their asset managers.
The report has further interesting research on biodiversity investing and ‘just transition’ – both of which have grown significantly in importance with institutional investors in just the last 3 years.