Investors continue to commit to net zero

Yasmine Raso

Senior Journalist, Financial Newswire

23 March 2023

Investor commitments to net zero and efforts to decarbonise portfolios have progressed according to Robeco’s third annual Global Climate Survey, however the oil and gas sector continues to tempt with strong returns.

Conducted by CoreData Research, the survey found 48 per cent of investors have made or are in the process of making a commitment to net zero by 2050, compared to last year’s 45 per cent. Over half (55 per cent) also said they had investigated the impact of their portfolios on carbon emissions.

Survey respondents also highlighted how the ongoing energy crisis has emphasised the need to support and invest in renewables (51 per cent), and biodiversity also emerged as a key concern and a central focus of their investing strategy for close to half of investors (48 per cent).

This comes despite the biggest hindrances to investing in biodiversity are a lack of data and ratings (53 per cent) and insufficient internal expertise (41 per cent), with only one-quarter of people investing in funds targeting biodiversity goals. However, there has been a surge in the demand for impact funds (60 per cent) and thematic funds (57 per cent) when compared to last year.

“Sustainability and the climate are the most discussed topics with our clients,” Robeco climate & biodiversity strategist, Lucian Peppelenbos, said.

“The Climate Survey shows that investors are progressing in implementing their commitments to net zero and stepping up on biodiversity, while at the same time navigating challenging energy markets and political pressures.”

Despite such progress, headwinds still remain that have hindered broader adoption of ESG investment strategies, including the temptations presented by the strong returns in the oil and gas sector and wanting to avoid short-term underperformance (47 per cent). The survey found 38 per cent of European investors have increased their short-term allocations to oil and gas companies, with 48 per cent in North America and 59 per cent in the APAC region.

The results also spoke to the ramifications of the ‘anti-ESG movement’ that seems to be picking up in the US, with 47 per cent of North American investors “concerned about rising political and legal resistance to their sustainable investment plans”, while the same could be said in Europe for 30 per cent of investors.

However, 63 per cent of European investors and 57 per cent of APAC investors said they were “more concerned about political pressure for failing to act on ESG and climate” – only 40 per cent of North America felt the same.

“While a lack of knowledge and data can still create barriers for implementation, we need to act now because, as investors, we have the means to put money to work where it can make a difference,” Peppelenbos said.

“We see it as our duty to share our expertise with others and we hope this research will further stimulate the investment industry to help tackle climate change and loss of nature and to work on decarbonisation.”