Planetary Pulse: Targeting effectiveness

Africa highlights

A plurality of Africa-based respondents favours active engagement (45%) and the adoption of climate-related themes (45%). These results are relatively stable compared to 2022 (at 44% and 41%, respectively). Although a high proportion (66%) have over one-quarter of their AUM invested in portfolios with climate-related instructions or objectives, African respondents are the least likely (28% vs 41% across regions) to state that financial institutions have a responsibility to fund the decarbonisation of high emitters in emerging markets.

A plurality currently sets targets (mainly emissions reduction) at whole-portfolio (45%) or asset-class level (45%) and, against the global trend, are planning to continue setting targets at asset-class level (48%). When it comes to frameworks, Africa is the only region where the Task Force on Climate-Related Financial Disclosures (TCFD) is most closely followed (55%). Interestingly, African respondents are most sceptical about the efficacy of frameworks, with 38% agreeing that using established climate-related target-setting frameworks prevents their investments from making a real-world impact on emissions.

The totality of African respondents consider transition finance to contribute strongly to lowering real-world emissions, and 75% say the same about negative screening. A strong disconnect is found here, as transition finance is implemented by a meagre 7%, although negative screening seems more popular, at 41%.