Global Institutional Investors Say "Climate Change Is Core to ESG... Difficult to Reflect in Investment Strategies"

Survey Results of Macquarie Asset Management Group

[Asia Economy Reporter Minji Lee] Global institutional investors consider climate change a key ESG issue, but the majority face difficulties incorporating climate change risks into their investment portfolios.

According to a survey conducted by Macquarie Asset Management Group on the 24th, more than half of the respondents identified climate change as a major ESG factor, but only 47% track some or all of the carbon emissions of their investment holdings. Among all respondents, 46% do not address the physical and transition risks related to climate change in their investment holdings.

Only 30% of respondents stated that they plan to achieve net zero carbon emissions in their investment portfolios by 2050. Investors in Europe, the Middle East, Africa, Australia, and New Zealand were somewhat more proactive in addressing climate change risks in their holdings compared to other regions, while investors in Asia and the Americas plan to accelerate ESG investments over the coming years through enhanced climate analysis and asset allocation.

Phil Peters, Head of Client Solutions Group at Macquarie Asset Management Group, said, “The survey results suggest that institutional investors face many challenges in understanding and managing the impact of physical and transition risks from climate change on their investment portfolios.” He added, “Going forward, asset owners and asset managers will play a critical role in supporting investors’ ESG investments by thoroughly identifying, assessing, and managing not only existing ESG-related risks and opportunities but also anticipated future risks and opportunities.”

The majority of institutional investors surveyed reported improving their existing investment approaches by analyzing and disclosing ESG outcomes over the past two years and increasing allocations to products incorporating sustainability approaches. The proportion of institutions with dedicated ESG functions increased from 47% in Macquarie Asset Management Group’s previous survey in 2019 to 59%. Eighty-nine percent of respondents plan to focus more on ESG over the next two years, and most agreed that positive sustainability strategies can further enhance returns.

Eighty-two percent of respondents plan to increase capital commitments to investment strategies incorporating sustainability approaches, and 77% intend to expand commitments to products or asset managers targeting specific ESG outcomes, indicating that ESG will have a greater influence on asset allocation processes as its importance grows.

Meanwhile, this survey was conducted among 180 global real asset institutional investors?including asset managers, banks, consulting firms, investment advisory firms, foundations and endowments, insurance companies, and pension funds?with total assets under management exceeding $21 trillion.

This content was produced with the assistance of AI translation services.