Climate change among institutions’ top stewardship concerns

climate_changeEngaging on environmental issues such as climate change and fossil fuel use are seen as the most important stewardship topics for global institutional investors ahead of this year’s United Nations Climate Change Conference, research suggests.

Almost two-thirds (64%) of investors globally believe engaging on environmental issues such as climate change or the use of fossil fuels as the most important stewardship topics, according to Schroders’ annual institutional study.

However, 80% of investors still find sustainable investing a challenge, the survey of 750 investors with $26.8 trillion in collective assets found.

Meanwhile, some 38% of the respondents had performance concerns over investing sustainably compared to 48% in 2019.

This is a further sign that fears investing sustainably could hamper returns are diminishing among investors, Schroders said.

Only 8% of investors globally said they did not believe in the benefits of investing sustainably, down from 23% in 2018. 

The Covid-19 crisis has also intensified the spotlight on sustainability, with 52% of institutions across the globe viewing sustainable investing as a more important focus because of the pandemic.

In Europe, over 60% of investors now see sustainable investing as more important as a result of Covid-19, the study of 750 investors with $26.8 trillion in assets found.

Keith Wade, chief economist at Schroders, said: “The pandemic is still seen as having the biggest influence on portfolio performance, but this has fallen significantly compared to a year ago. 

“The improvement in global growth prospects is clearly having an influence and investors are beginning to get concerned about a withdrawal of liquidity through a tapering of monetary policy. This probably reflects fears about inflation, although ultra-low interest rates are expected to persist.”

This focus on the environment was even more pronounced among European investors and was also the key focus for North American and Asia-Pacific-based investors.

Wade added that other rising influences are regulation and climate change, most likely reflecting the new Biden administration’s agenda in the US, as well as recent moves by China and the European Union.

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