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Climate change and AI are “defining challenges” for asset management

Climate_changeMany institutional investors consider climate change an investment risk that is not yet priced in by key financial markets worldwide, research has found.

Over 90% of the asset owners took this view, while many also highlighted risks posed by AI, which 85% said could provoke a societal backlash and geopolitical tensions.

The report, carried out by BNY Mellon Investment Management and Create-Research, surveyed investors with around $12.75 trillion (€11.5 trillion) in assets under management.

Investors were factoring in challenges stemming from climate change, including the possibility of draconian measures to deal with it.

They were also said to be ensuring they have intensive engagement with companies, and increasing investments in green bonds.

Over half of respondents viewed climate change as a risk and an opportunity, while only 7% saw it only as an opportunity.

The increasing prevalence of artificial intelligence was seen to create a number of challenges to investing. These include a shortening corporate lifecycle and diminishing prospects of emerging economies caused by onshore manufacturing activities.

Matt Oomen, BNY Mellon Investment Management’s global head of distribution, said: “Already we are witnessing a change in the way markets operate in response to these two super-tanker trends. These will be the defining challenge not just for the current generation of asset managers and investors, but for generations to come.”

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