Report highlights institutional investors’ increased focus on climate change

Three-quarters (75 per cent) of institutional investors now have climate change as a central or significant factor within their investment policies, Robeco’s 2022 Global Climate Survey has revealed.

This figure represents a “steep” increase from the 34 per cent of respondents who cited climate change as a significant part of their strategies two years ago.

Robeco also found that net-zero commitments had moved “into the mainstream” as nearly half of global investors had made a public commitment to achieving net-zero greenhouse gas emissions from their investment portfolios by 2050 or are in the process of making this commitment.

The survey reported that the increased drive for real-world impact manifested itself in different ways, such as the adoption of thematic investing in sustainability-related themes including renewable energy or green technology.

Seven in 10 (70 per cent) institutional investors were currently implementing thematic investing, with European and Asian-Pacific investors being ahead of North American investors.

Active ownership, which includes engagement and voting, had risen from being a central or significant factor in 54 per cent of investment policies two years ago to 73 per cent now, according to the report.

While this trend is strongest among European investors (from 81 per cent to 90 per cent in the past two years), it was also present in North America (from 60 per cent to 68 per cent) and Asia-Pacific (up from 80 per cent to 82 per cent).

Investor awareness of biodiversity was also found to be increasing, more than doubling over two years, with 41 per cent of investors saying that biodiversity was a significant factor of their investment policy compared to 19 per cent two years ago.

Implementation still proved to be challenging due to a lack of research data, ratings and company information on biodiversity, according to 50 per cent of investors.

Additionally, 43 per cent of institutional investors reported seeing a shortage of suitable investment products and strategies as an obstacle to taking account of biodiversity, while 46 per cent mentioned insufficient demand from end investors.

The survey also discovered investors’ increasing appetite to divest from oil and gas companies using fossil fuels, doubling from 11 per cent to 22 per cent.

Robeco climate strategist, Lucian Peppelenbos, commented: “The Climate Survey sheds light on how institutional investors’ view some of the key issues around climate change, biodiversity, and stewardship.

“While there is uncertainty around these topics, we also know that we must take urgent action. We don’t have the luxury to wait for perfect data or perfect solutions.

“As investors, we need to pull up our sleeves and work our way through it, as we have the means to put money to work where it can make a difference.

“Being a global leader in sustainable investing, we see it as our duty to share our expertise with others and we hope that this research helps stimulate the investment industry to play a constructive role in combating climate change and loss of nature.”

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