The Institutional Investors Group on Climate Change (IIGCC) has released a new tool to help asset owners meet their own individual net zero goals by incorporating climate stewardship into selection, appointment and monitoring of external asset managers.

The tool – the Asset Owner Stewardship Questionnaire – will provide asset owners that choose to use it with qualitative questions for due diligence when selecting an asset manager, and quantitative reporting when monitoring asset managers.

The questionnaire was produced by IIGCC’s Asset Owner Working Group, which contains representatives from 10 organisations. Members of the group include Aegon UK, Guys & St Thomas’s Foundation, Brightwell, Phoenix Group, and NEST.

IIGCC also engaged with the Investment Consultants Sustainability Working Group and members of the Stewardship Regulators Group (SRG) more closely involved in stewardship policy and regulation when developing the questionnaire.

Asset owners using the tool will be encouraged to adopt it in full to enable a more consistent approach to how stewardship and engagement are measured by them, and to promote better data collection by asset managers. However, the questionnaire can also be adopted into asset owners’ existing selection and monitoring processes in whatever way they find most useful and appropriate.

Just Climate solutions fund raises $1.5bn in institutional capital

Just Climate, an investment business established by Generation Investment Management to address the net zero challenge, has announced its inaugural fund, Climate Assets Fund I, exceeded its $1bn target, raising $1.5bn in institutional capital.

The fund, which is now closed for new investment, invests in the highest impact solutions that can radically reduce or remove emissions, while generating attractive risk-adjusted financial returns, it was announced.

The fund closed with a diverse set of institutional investors with a far-reaching geographical spread, including California State Teachers’ Retirement System (CalSTRS), PSP Investments, AP4, Colonial First State Investments, Builders Asset Management and AP2; as well as other pensions, sovereign wealth funds, insurers, financial institutions, endowments, foundations and family offices from North America, Europe and the Asia Pacific region, Just Climate said.

Clara Barby, senior partner at Just Climate, said: “Establishing climate-led investing as a capital allocation imperative is core to our mission. We start with climate impact, identify solutions that will make the biggest difference, and then direct and scale institutional capital to those solutions that we believe can generate attractive risk-adjusted returns.”

The fund will be part of Just Climate’s industrial climate solutions focus and will pursue investments in growth-stage, asset-heavy companies globally which have the potential to deliver transformational climate impact across some of the highest-emitting, hard-to-abate industries – including energy, mobility, industry and buildings — in order to generate outsized emissions abatement in the next decade.

Pension funds slow to invest in biodiversity

A new report by Pensions for Purpose has revealed that while awareness of biodiversity risks among UK pension funds is growing, at least 62% are not invested in any natural capital assets.

The research, commissioned by Gresham House, highlighted the opportunity for asset owners and managers to enable more resilient portfolios and bolster biodiversity by integrating nature preservation and restoration into their investment strategies.

Pensions for Purpose is calling on asset owners and managers to start investing to preserve and enhance natural capital.

Findings from the report – Natural capital & biodiversity - where are UK asset owners on their journey?  – showed that some UK asset owners are incorporating biodiversity and nature-related risks into their investment decision-making, but only 38% of those interviewed have invested in natural capital solutions, and opinions on doing so are varied due to the concept’s nascency.

With the World Economic Forum forecasting that $2.7trn is needed annually until 2030 to scale the transition of socio-economic systems to address nature crises, natural capital is vital, Pensions for Purpose noted.

However, to tackle global challenges such as climate change, nature loss and resource depletion, the investment industry must look beyond traditional natural capital areas and consider how finite natural resources and benefits can be preserved and restored, it added.

Karen Shackleton, chair and founder of Pensions for Purpose, said: “The investments of the past based on natural capital exploitation are no longer viable: the cost of depleting our resources has become too high, both environmentally and financially. Investors must therefore seek sustainable alternatives that preserve and enhance our planet’s natural capital. Addressing biodiversity loss is essential for preserving ecosystems and is a smart investment decision, enabling more resilient portfolios amid growing public awareness and future regulation.”

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