The head of responsible investments for KLP, Norway’s NOK1.1trn (€93bn) municipal pensions firm, has said the financial sector has taken on more responsibility for the climate transition than it should have, and warned against confusing political noise with genuine financial risk.
Speaking on a panel at the IPE Conference & Awards 2025 event in Seville last week, Kiran Aziz said the climate transition is fundamentally a real-economy challenge, adding that investors cannot compensate for fractured political consensus or inconsistent regulation.
“As a financial industry, we have probably taken more responsibility than we actually choose to deal with, and we are realising that we need to be quite clear on what we’re able to achieve,” Aziz said.
Panellists were asked to comment on the state of play in responsible investment amid an anti-ESG backlash, asset manager retreats from collaborative engagement initiatives and questions about governments’ climate change commitments.
Aziz said that KLP’s own targets carry some trade-offs.
“It comes with some cost […] and this is something you really need to balance,” she said, referencing KLP’s 2030 interim goals.
KLP aims to cut its financed emissions by 45% by 2030 and reach a 95% reduction by 2050.
Policy advocacy
Entitled ‘Sustainability in a Populist Era’, the panel also discussed how asset owners are increasingly noting that climate outcomes depend on effective public policy, and that policy engagement is no longer optional.
However, while most asset owners increasingly accept that systemic change requires political engagement, many are still figuring out how, according to Aziz.
She confirmed that KLP has increased its direct participation in policy processes, particularly in Norway.
“We have been quite active in the past years using that tool, but we also realised that it requires a different competence […] and I’m not so sure we are capable of everything.”
Aziz added that in the current information environment, investors must distinguish between political noise and actual financial risk.
Mikael Anveden, head of strategic investment analysis at Swedish public pension fund AP4, went on to stress that decarbonisation must be economically viable.
Acknowledging that the political environment has shifted, especially post-Ukraine, Anveden said this has weakened support for green incentives.
“The EU changed priority when the invasion of Ukraine happened […] and shifted from supporting the transition to supporting many other areas that were critical for voters, such as defence,” he noted.
“Maybe we need to accept that green projects often cost money, and if the political support and incentives are not there anymore, somebody needs to pay for it, or prices need to come down,” Anveden continued.
“We need to accept that green projects often cost money, and if the political support and incentives are not there anymore, somebody needs to pay for it, or prices need to come down”
Mikael Anveden at AP4
Leanne Clements, head of responsible investment for The People’s Partnership, argued that the investor community must show humility and acknowledge missteps that contributed to the anti-ESG backlash.
She suggested the sector got ahead of itself without building solid foundations first.
“I was amazed at how we’d moved from single materiality to double materiality,” she said. “We went straight to stewardship outcomes […] Have we embedded single materiality before we’ve jumped into the double materiality game?”
She also questioned whether investors had successfully brought the public along.
“Did we bring the voters, our members, along with us on this journey? […] Scare tactics are not going to work,” she added.
Iancu Daramus, principal consultant, decarbonisation and private markets at consultancy ERM, argued that the global emissions curve is bending, and that despite negative headlines, the multiple Paris Agreement goals are closer to being achievable than they appear.
“We always hear of reaching net zero by 2050 as if that’s a very clear line […] that was not actually what was said in the Paris Agreement,” Daramus said.
“To be compatible [with the Paris Agreement], you’re talking about 2050–2060. There is a range,” he added.
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