Asian investors are adopting more sophisticated strategies and tools to manage climate change risks and have a large and growing appetite for climate-aligned investments, the latest industry survey by the Asia Investor Group on Climate Change (AIGCC) has found.
The second annual Net Zero Investment in Asia survey canvassed the views of regional investors from organisations collectively representing over USD1.9 trillion in assets under management across November and December 2020. Asset owners (including insurance firms, government pension funds and sovereign wealth funds) and asset managers were among those surveyed.
The survey found an upwards trend in the use of decarbonisation strategies (more than 40 per cent of respondents) and portfolio tilting (more than 35 per cent of respondents), suggesting that investors are more actively managing portfolios to pivot away from assets facing climate risk while capitalising on net zero opportunities.
Asian investors are also increasingly (70 per cent of respondents) considering the adoption of portfolio-wide decarbonisation goals for their portfolios but are currently lagging their international counterparts in formally integrating these targets.
In other survey findings:
- Reporting via the Task Force for Climate-related Financial Disclosures (TCFD) recommendations remains high, with 50 per cent of respondents already disclosing against the framework and another 30 per cent actively considering it.
- Asian investors are more widely conducting carbon footprint analysis on assets, particularly in listed equities (79 per cent of respondents in 2020 vs 19 per cent in 2019) and fixed income (74 per cent or respondents in 2020 vs 11 per cent in 2019).
- More than 70 per cent of respondents said that the disruption of the COVID-19 pandemic had not affected their organisation’s progress on climate change.