Climate change remains a large part of the investment approach being taken by European investors, although the region is being overtaken by the Asia-Pacific when it comes the proportion of investors who prioritise this ESG issue.
In its fourth annual survey of 300 investors, asset manager Robeco said it found wide regional differences in attitudes towards climate investing.
The study said: "The Asia-Pacific (APAC) region powers ahead while interest in North America lags behind. The number of APAC investors for whom climate change is central to, or a significant part of, their investment policy was 79 per cent, surpassing Europe (76 per cent) for the first time.
"Enthusiasm is, however, continuing to fall in North America amid political wrangling over the perceived cost of integrating environmental, social and governance (ESG) factors into investments, where only 35 per cent prioritise climate investing. This knocked back the global average to 62 per cent from 71 per cent in 2023, but still signals that a majority of investors have climate investing as a priority."
Lucian Peppelenbos, climate and biodiversity strategist at Robeco, added: “When we look at the survey findings, we can see that many investors are adopting a focused and diligent approach to the work of decarbonising investment portfolios and moving towards the low-carbon economy of the future.
"As they get to grips with the hard work involved in the climate transition, there is less naivety, and more careful deliberation and scrutiny over what is needed to embed sustainability into the many aspects of running investment portfolios.”
According to the study, insurance companies stand out for making a net-zero commitment compared to other institutional and wholesale investors, perhaps driven by their unique exposure to climate change from both sides of the balance sheet.
Some 39 per cent of insurers have made a public commitment, and another 20 per cent are in the process of doing so. Regionally, North American investors are more likely to be ‘commitment-phobic’ - nearly half (46 per cent) have ruled out a commitment to net-zero, up from 26 per cent last year.
Disorderly transition
Over three-quarters of investors expect the transition to be disorderly in some way, with too little done collectively, the report found.
Only 15 per cent expect an orderly transition in which governments and markets work together to cut emissions, and 8 per cent expect a ‘hot-house world’ in which very little action is taken to avoid global warming.
Additionally, fewer investors believe that the core Paris Agreement 2 degree goal can be achieved. Less than a third (30 per cent) think this is possible compared to 38 per cent in 2023, while 41 per cent think it is not achievable - up from 30 per cent the last time.
Allocating to the transition
The study also found that investors are currently allocating more funds to general climate strategies rather than those focusing specifically on 'transitioning' companies.
Over a third - 37 per cent - are investing in strategies targeting companies with credible transition plans, although a majority (63 per cent) plan to do so in the next one to two years.
