GLOBAL - Institutional investors are being encouraged to call on governments to deliver clarity on national climate change policies and transparency on market signals ahead of the COP 15 United Nations Climate Change Conference, or Copenhagen Summit, next week.
A survey on behalf of the Institutional Investor Group on Climate Change (IIGCC) and Danish pension fund ATP claimed nearly all the respondents believe addressing climate change is an "integral part of their fiduciary responsibility". And many are trying to integrate climate considerations into their investment strategies, particularly over the longer-term.
Findings from the research of 30 institutional investors across Europe, Asia and North America - with assets of more than $2trn (€1.3trn) - showed two out of three investors believe they should exercise ownership rights and address climate issues in their dialogue with companies. Only a "small minority" said they did not accept climate change as a major investment risk.
The results, published in an ATP newsletter, revealed almost 80% of respondents think investors should address climate issues in dialogue with companies, while over 70% believe they should factor climate risks into long-term investment strategies.
Additionally, over 60% think investors should participate in networks, and support the development of relevant policy measures. None of the respondents agreed that the current focus on climate risk is likely to pass, and less than 10% claimed factoring in climate risks will hamper returns or that these challenges should only be addressed at a political level.
Bjarne Graven Larsen, chief investment officer at ATP, said: "The emerging consensus on this issue is striking. We only have to look back a few years to find a heated dispute; when addressing climate change was seen by some as undue political activism. Today climate change is understood differently."
He argued that leading investors think about climate change "first and foremost in risk terms, and taking stock of risks - and of opportunities - is a key responsibility of any pension fund".
To show its support for climate change, ATP is creating a dedicated fund, known as the Institutional Investor Climate Change Action Fund for Emerging Economies, and will allocate €1bn to it. The fund is intended to become a joint initiative involving several like-minded institutional investors.
However, the survey also noted while many respondents are outspoken about the need to act on climate change, "a somewhat smaller number" are actively addressing the issues in current practices. For example, less than 60% currently discuss climate risks with companies, while just over 40% factor these issues into long-term investment strategies.
Less than 30% also said they participate in the development of policy measures and around 20% admitted they do not address climate challenges in their existing strategies.
Stephanie Pfeifer, programme director at the IIGCC, said some survey participants are "actively demonstrating leadership by encouraging their asset managers to consider the risks and opportunities presented by climate change and climate policy. However others have not yet come that far".
The report meanwhile claimed that the "majority of respondents" believe institutional investors should speak up in the run-up to COP15, about the need for clear national implementation policies and transparent market signals.
Rob Lake, head of sustainability at APG Asset Management, said: "Increased awareness, better data and continued discussions on practices and models inside the investor community will contribute to this development going forward. But Copenhagen needs to deliver to support the confidence which is necessary for investors to make the required long-term investments."
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