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How asset owners are trying to make a bigger (ESG) impact

How asset owners are trying to make a bigger (ESG) impact

Major asset owners are starting to consider how to better measure the effect of their sustainable investment approaches.

During the G7 summit hosted by the UK from June 11 to 13, the International Institute for Sustainable Development revealed a startling fact: the world’s richest nations continue to provide $190 billion of direct funding of oil, gas and coal a year.

At the same time, they have been removing or downgrading some environmental standards.

The revelation underlined just how entrenched fossil industries are in the world, and how far there is to go in the drive to combat climate change.

Activists are increasingly asking asset owners to play a bigger role. Many are doing so, embracing the ‘net zero’ asset managers’ initiative that seeks to cut global carbon emissions flat by 2050. They have begun analysing which assets are most exposed to climate risk and pushing their external managers to drill down further.

“Stakeholder engagement is ramping up all over the world,” said Del Hart, head of external investments and partnerships at the New Zealand Super Fund. “Europe has been leading in this regard, so we have historically engaged in discussion with investors there such as PGGM in the Netherlands. But in the US too, there is a lot more happening now.”

According to Mercer, more than 50 initiatives have now been established that seek to compel and support investor activity on climate change, whether focused on integration, stewardship, sustainability investment or screening.

For example, 168 global asset managers and financial institutions managing more than $17 trillion in assets have signed up to support the Carbon Disclosure Project’s campaign to ensure that data on climate change, deforestation and water usage is properly reported by companies.

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