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

North America highlights

At regional level, commitment to climate-related investment practices in North America (NA) has decreased, year on year, with 2022’s top choices — climate-related factor integration and positive screening — both of which saw adoption of 52% in 2022, falling to 25% and 45%, respectively. The proportion adopting climate-related themes has decreased from 48% to 33%. There has been a backlash against ESG in the US. The level of assets under management (AUM) invested in portfolios with climate-related instructions or objectives is lower in North America than globally.

While emissions reduction (45%) is still the most commonly applied climate-related target type, and 53% currently set climate-related targets at asset-class level, our research shows the global trend of intention to move to fund-level targets over the next 12 months is also present in NA (49%). The majority (55%) follow the Science Based Targets initiative (SBTi) as a guiding framework. However, almost half (47%) believe industry players are given too much discretion when it comes to selecting climate-related targets.

Interestingly, NA-based respondents are the only ones confident that their decarbonisation strategies are leading to actual emissions reduction. For example, the same proportion (57%) says transition finance is contributing to portfolio decarbonisation AND to real-world emissions reduction. Similar numbers say active engagement contributes to portfolio decarbonisation (60%) and real-world emissions reduction (55%).

Concerns over future returns are as strong as in other regions. More than half (55%) say they expect it to be increasingly challenging to achieve emissions-reduction targets while delivering the best possible returns.

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FT Longitude research paid for by Ninety One.

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