Australia, Europe and NZ lead in global practices: climate change investor groups publish report
- 14 June 2011
LONDON: The Institutional Investors Group on Climate Change (IIGCC), the North American Investor Network on Climate Risk (INCR) and the Australia/New Zealand Investor Group on Climate Change (IGCC), today published a report on the investment practices of leading asset managers and owners towards climate change issues, which shows bold action towards accelerating the Clean Revolution.
Conducted by Mercer, the report draws from the survey responses of 46 asset managers and 44 asset owners whose collective assets top $12 trillion.
The results show that not only do the respondents understand the importance of tackling climate change as a 'material investment opportunity' and are making significant progress, but also that almost all respondents report on their climate change related activities.
The results also show that there are regional differences in progress, with US investors lagging slightly behind their counterparts in Europe, Australia and New Zealand.
In the US, the lack of clear climate policy means investors focus more on companies, particularly with improving disclosure, rather than integrating climate change into valuations, or actively encouraging investment managers to do so.
As a result of stronger climate policy in the EU - especially in relation to carbon pricing and renewable energy policy - there is greater integration of climate change from European investors.
In Australia the lack of carbon pricing system and a less certain regulatory environment is a concern, although there is a growing focus from investors on policy advocacy and the physical impacts of climate change.
Ole Beier Sørensen, Chairman, IIGCC and Head of Research and Strategy, Danish pension fund ATP, said: “It is encouraging that climate change is becoming a more strategic issue with the majority of asset owners and asset managers. They increasingly view climate change as a material investment risk/opportunity. However, to address the risks and opportunities arising from climate change, investors must have the tools to take meaningful action. More than anything investors need stable and transparent policy frameworks which provide clarity and certainty. A number of countries and regions are moving in the right direction, but there is still a long way to go. Policy makers need to remove barriers to low carbon investment and they need to create a relatively predictable price on carbon.”
Mindy Lubber, Director, INCR and President, Ceres, said: “US investors have strongly advocated for robust climate policies, and they have succeeded in getting the US Securities and Exchange Commission to issue ground-breaking climate risk disclosure requirements for companies. But their climate-related investment practices, in most cases, trail their international peers, and this will be a key focus for INCR in the coming months."
Frank Pegan, Chairman, IGCC Australia/New Zealand, commented: “It is extremely difficult for investors to make allocations at scale to low carbon assets while policy settings are fragmented or short term in nature. We will strive to make thematic allocations but reallocation of substantial investment to the low carbon economy requires policy makers to step up with certain and long term investment signals.”
Read the IIGCC report here
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