Climate change was a material risk or investment opportunity for 83% of asset owners including pension funds and foundations and 77% of money managers, according to a global survey of investment practices released Wednesday.
Seventy-eight percent of asset owners consider climate-change integration when selecting managers, and 53% monitor existing managers on climate issues, although less than 18% set clear expectations of their managers, according to a survey by Mercer for the North American Investor Network on Climate Risk, the European Institutional Investors Group on Climate Change and the Australia/New Zealand Investor Group on Climate Change.
More than half of the asset owners, 57%, conduct climate risk assessments on their portfolios, and 26% change their investment strategies because of that assessment.
Most of the change in investment strategies came from European and Australian investors, with only 13% of North American asset owners changing their investment strategies based on climate risks.
The report singled out the New York state comptroller's office, which oversees the $140.3 billion New York State Common Retirement Fund; the $235 billion California Public Employees' Retirement System, Sacramento; and Pax World Management for setting examples on climate-related investment actions through shareholder resolutions and comprehensive environmental policies for their investment portfolios.
The ongoing drought across the U.S. provides a good example of why climate change should be part of investment decisions, said Christopher Davis, director of investor programs at Ceres. Ceres is a coalition of investors and public interest groups that coordinates the Investor Network on Climate Risk, which represents 100 institutional investors with $10 trillion in assets.
“While it's encouraging that more investors are concerned about the risks of climate change, many of them could be doing more to protect their clients and portfolios from those risks,” he said in a statement.