Big Wealth Managers Unprepared for Climate Risk: Study
It’s “shocking” that half of the biggest investment entities managing US$38 trillion in global financial wealth are taking no action to protect their assets against climate risk, a report released Monday charges.
The Asset Owners Disclosure Project, an independent non-profit that seeks to stimulate greater management response to climate-related threats on behalf of investors, found that “almost half of the world’s top 500 investors are doing nothing to address climate change,” Reuters reports.
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“Climate change risk is now a mainstream issue for institutional investors,” the study’s authors noted. “However only a handful are protecting their portfolios from the very real danger of stranded asset scenarios. And it is shocking that nearly half the world’s biggest asset owners are doing nothing at all to mitigate climate risk. Nearly half the index remains X rated, with no evidence they are taking any action.”
There was some good news. Nearly a fifth of the investors examined, 97 in all with US$9.4 trillion in managed assets, “were taking tangible steps to mitigate global warming.” The group of very best performers, which the study rated AAA, grew by 33%.
Most of the funds in the study’s top-ten list are based in Europe, the United States, and Australia. The group it identified as laggards” was made up mainly of Middle Eastern and Asian insurers and sovereign wealth funds.
The biggest of the X-rated: the United Arab Emirates’ sovereign wealth fund, the Abu Dhabi Investment Authority, with US$773 billion exposed to climate risk.
“Eleven Canadian institutional investors with funds worth over CAD$350 billion, including nine pension funds, have taken no action to mitigate climate change risk to their portfolios,” the National Observer reported.