An extensive survey of the world’s leading asset managers has found that only a few are including climate risks and opportunities throughout their investment analysis.
The report by US-based Ceres, a coalition of investors, environmental groups and other public interest organisations, surveyed 500 of the world’s foremost assets managers on how they factor climate-related trends into investment decision-making.
Nearly three-quarters of asset managers reported that they did not expressly consider climate risks and opportunities.
Mindy Lubber, president of Ceres and Director of the Investor Network on Climate Risk said:
‘These findings make clear that the investment community is overly focused on short-term performance and ignoring longer-term business trends such as climate-related risks and opportunities.
'The recent sub-prime mortgage meltdown is a painful reminder of the fallout for investors who ignored 'hidden' long-term risks.’
The report also found that bonus structures are compounding the issue by not rewarding managers who factor in climate change.
‘Incentive structures and benchmarks that asset owners use for evaluating asset managers are heavily weighted towards short-term performance focusing primarily on quarterly returns where climate risks are far less likely to show up,’ the report said.
Don’t ask, don’t get
Significantly, asset managers said they weren’t being asked to consider climate change by customers.
According to the survey, 49 per cent said they did not consider climate risks and opportunities because asset owners such as pension funds and other institutional investors did not ask them to.
The report highlighted UK-based F&C Management Ltd as one of a handful of institutions found to be integrating climate risks and opportunities throughout their investment practices.
A spokesperson for F&C said investors were leaving their existing asset managers and coming to them to ensure climate risk was factored in.
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