Awareness of climate risk and its impact on the investment world is rising rapidly, but there are a number of challenges confronting asset managers and fund boards – from the implementation of a climate risk and governance framework to the availability of the tools and skills needed to monitor and manage climate risk.
Climate risk awareness may be rising but large gaps remain in how these risks should be measured, monitored and managed.
When asked for the main drivers of future development of climate-related strategies (Q4), it is not surprising that ‘regulatory requirements’ was the most cited factor (30%), followed by changing investor preferences (24%).
It is also useful to compare the priorities for integrating climate risk into firms’ strategic thinking (Q9) with the drivers for climate change (Q4). The two clearest answers for Q9 are investment decision-making (38%), and integrating operational risk management (36%), which suggests that awareness of risks still has some way to go.
People will also play a critical role, especially those with expertise and/or experience in climate-related work. As Q13 suggests, the industry could be facing a potential skills shortage, as cited by 72% of respondents.
As mentioned, data is critically important in the ESG world, not just for reporting but also for due diligence, risk management and performance tracking and benchmarking.
The survey asks if firms are planning to provide reporting based on TCFD recommendations (Q19). Only one in five (19%) are already providing this reporting, while just under a quarter (24.5%) definitely plan to.
The survey asked where the strongest demand for climate-related products lies with investors (Q23). The clear answer was for sustainable equity funds (30%) which was cited by twice as many respondents as the next most popular option – existing strategies that have a greater climate focus via exclusion (14%).
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Why fund admin tech is a key competitive advantage Cian Hyland, Strategic Client Relationship Director at Deep Pool Financial Solutions spoke to us about how technology enables efficient data management, reporting automation and secure data access. | Insights from State Street Cuan Coulter, Global Head of Asset Managers and Head of UK and Ireland at State Street, discusses how fund managers decide between the two cross-border fund domiciles, namely Ireland and Luxembourg, and why asset managers find managing data so difficult. |
Unlocking access to private markets Vincent Clause, who heads the global funds strategy at Euroclear and David Genn, CEO of Goji, sit down with Funds Europe to explain how technological innovation, bolstered by operational experience and global reach, can provide solutions that unlock access to private markets. | Sustainable investing in the DC world Claire Felgate, a specialist in UK defined contribution pension schemes at asset manager BlackRock, talks with Funds Europe editor Nick Fitzpatrick about how - and the pace at which - DC pension schemes are adapting to the requirements of sustainable investment. |
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Watch our webinar for a deep dive into the findings of the fresh-off-the-press EU Taxonomy 2023 Insights Report, based on Clarity AI's best-in-class coverage of EU Taxonomy reported data and CDP industry-leading environmental datasets.
In this webinar, we discuss tools for optimising fund data management and distribution, the role of global fund classifications and ratings, and how technology and automation enhance data integrity and insights.
