The risks of global climate change are significant, but major global asset owners and asset managers are realizing that these challenges also present profitable investment opportunities.
A recent study asks: Are these asset owners being proactive enough in seeking climate change investment opportunities? The answer – not nearly enough.
The study, conducted by Mercer and jointly published with 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), analyzed responses from 44 asset owners and 46 asset managers with collective AUM of over $12 trillion.
Results show that these asset owners and managers are beginning to incorporate climate change issues into their investment procedures, but they have not been proactive in shifting asset allocation models to capture opportunities in climate change related fields.
Activity varies greatly by geography. U.S. investors, for example, are lagging behind their counterparts in Europe, Australia and New Zealand.
Strong climate policies in the European Union has contributed to a greater integration of climate change across the portfolios of European investors, while Australian investors are becoming more focused on policy advocacy and addressing the “physical needs” of climate change.
In the United States, however, the lack of national energy and climate policy left investors in an uncertain environment. U.S. investors concentrate more on engaging with companies rather than integrating climate change issues into their portfolio valuations.
Over half of the investors surveyed invest in funds with a focus on climate change, and 45% of surveyed asset owners will considering allocating to thematic investments over the next few years.