Asset owners were never going to have a single, all-encompassing approach to the risks and opportunities presented by climate change. When allocators of capital, the top 100 of which manage almost US$26 trillion1, started implementing strategies in alignment with the 2015 Paris Agreement, it became imperative they learn about all aspects of the energy transition.
By itself, decarbonising portfolios is little more than cosmetic. Many asset owners, recognising the importance of real-world impact, are initiating investment strategies designed to generate risk-adjusted returns from the energy transition.
Ninety One’s research, conducted independently by FT Longitude, surveyed 300 asset owners and consultants across eight sub-industries. Making up the respondents were 125 in Denmark, Germany, the Netherlands, Switzerland, and the UK; 80 in the US and Canada; 60 in Australia, Hong Kong and Singapore; and 35 in Botswana, Namibia and South Africa.
The research investigates asset-owners’ strategies and investment through the lens of real-world impact, in terms of the targets they set, the frameworks in which they operate, and the practices they implement. The findings show that asset owners are deploying a broad spectrum of approaches. These range from setting targets for entire portfolios to investing in the efforts of high emitters committed to achieving their own transition pathways.
Among the findings was a particular surprise. The research shows that climate-related investment practices seem to have decreased, year-on-year. This response comes in a year, 2023, when July was the hottest month on record globally. On July 31, the daily sea surface temperatures value rose to a record high2.
About the research
This report reveals the findings from new primary research into real-world impact and transition finance. It is based on a survey of 300 senior professionals at asset owners and advisors around the world, including pension funds, insurers, endowments, foundations, central banks, sovereign wealth funds and consultants. The research was carried out in September 2023.
We would like to extend our thanks to the following experts for their time and insights:
- Hortense Bioy, Global Director of Sustainability Research, Morningstar
- Andrew Coburn, CEO, Risilience
- Xolisa Dhlamini, Head of Sustainability Operations and Impact and Investment Committee Member, Sanlam Umbrella Fund
- Daan Spaargaren, Responsible Investment Strategist, PME Pensioenfonds
- Michael Wilkins, Executive Director and Professor of Practice, Centre for Climate Finance & Investment, Imperial College Business School
1 Thinking Ahead Institute.
2 Copernicus Climate Change Service.
Next chapter:
Climate-focused targets: moving to a granular approach
Our research shows that, over the next 12 months, many asset owners expect to pivot from top-level targeting towards fund-specific targets.
Resources
Access Planetary Pulse 2023
Download the report or view it visualised to see how asset owners weigh risks and opportunities of investing for an inclusive energy transition.