Far too many investors ignoring climate change

Half of the world’s biggest investors do not take climate change risk into account when making investment decisions. Scandinavian and Dutch investors are the best at climate risk management.

Of the world’s 500 biggest investors, only 97 are taking “tangible action” to offset climate risk to their assets, according to a report by the Asset Owner Disclosure Project. The London-based non-profit organisation seeks to protect retirement savings and other long-term investments from the risks posed by climate change.

According to its latest report, these 97 investors manage around USD 9.4 trillion in funds. A further 157 investors, worth USD 14 trillion, are taking “the first steps” to manage climate risk.

But the number of climate-savvy investors is at least on the rise. The top investors successfully managing climate risk within their portfolios has grown to 31, with a total of USD 2.7 trillion assets under management. Over the past five years, the 12 best of these institutions had better returns than comparable funds.

The US Environment Agency Pension Fund topped the Global Climate 500 Index, followed closely by Australia’s Local Government Super. Other leading investment groups include the Dutch pension fund ABP and the California Public Employees Retirement System.

According to the report, Scandinavian asset owners are doing the most to mitigate climate risks. Sweden, Norway, Australia, France and Denmark topped the Country Index. The UK came in 7th, the US in 9th and Canada in 11th.

The funds taking no action to manage climate risk came from the oil states of Abu Dhabi, Kuwait, Saudi Arabia and Qatar, as well as China and Hong Kong.

 

Image credit: Aasif Iqbal J, flickr/Creative Commons

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