Planetary Pulse: Targeting effectiveness

Asset owners weigh risks and opportunities of investing for an inclusive energy transition.

Are asset owners moving from decarbonising their portfolios to reducing emissions?

Planetary Pulse 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.

Planetary Pulse visualised

Planetary Pulse Data Viz
2023 regional highlights

Continental Europe highlights

As early adopters of ESG integration, European asset owners’ commitment to climate-change mitigation remains strong, with 53% stating they have at least one-quarter of their AUM invested in portfolios with climate-related instructions or objectives. They are the most likely across regions to agree that financial institutions have a responsibility to provide investment capital to fund the decarbonisation of high emitters (59%).

Currently, a plurality (37%) set climate-related targets at asset-class level, with a view to begin setting these at individual fund level (46%) over the next 12 months, as required by the EU’s Sustainable Finance Disclosure Regulation (SFDR).

The top choice in 2022, climate-related factor integration, is again the most common practice (36%), although this proportion has decreased sharply, year on year (from 54% in 2022). However, there is a disconnect between practices and both decarbonisation and emissions-reduction intentions. Positive screening is viewed as contributing significantly to portfolio decarbonisation (60%) AND real-world emissions reduction (63%) but only 25% of respondents have implemented the practice.

European respondents appear confident of the relevance of their net-zero frameworks (59%), yet a majority (51%) favours a custom/hybrid target-setting framework, which takes elements from various prominent frameworks and adapts them to meet their organisations’ specific requirements.

European respondents have high expectations of transition finance in emerging markets: 67% say the practice contributes to real-world emissions reduction and 54% believe that emerging-market transition finance represents a major commercial opportunity for asset owners.

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FT Longitude research paid for by Ninety One.

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