Asset managers need to ‘lean in’ to climate change initiatives if there is any hope of achieving Net Zero emission targets, David Crawford, Head of UK Institutional and Wholesale Distribution at Nordea Asset Management, has said.
Crawford expressed his disappointment at the number of firms that have withdrawn from Climate Action 100+ and the Net Zero Asset Managers (NZAM) initiative, claiming that engagement is the most effective way to drive positive change.
This January BlackRock announced its departure from NZAM, swiftly followed by Northern Trust, to join a number of asset managers that have abandoned the collective industry efforts to forward the green transition.
“From a personal perspective, I’m very disappointed that the asset management community has backed away from [NZAM and Climate Action 100+]. NZAM is setting out the big, broad ambitions of where we want to go and what we want to do. I think a lot of organisations probably feel this is being imposed on us, and it’s going not going to be a good result.”
He added: “I think it is important to see that NZAM is about doing the good things, being the right people, investing in the right areas, but above all it is about engagement and communication.”
The NZAM exodus has forced the organisation to launch a review to ensure it is still able to “help investors mitigate the material financial risks of climate change and to realise the enormous benefits of the economic transition to net zero”.
NZAM stated: “Recent developments in the US and different regulatory and client expectations in investors’ respective jurisdictions have led to NZAM launching a review of the initiative to ensure NZAM remains fit for purpose in the new global context.”
Crawford says the slew of multi-million-euro mandates Nordea Asset Management has secured in recent months are testament to institutional investors’ continued appetite for sustainable investment strategies.
These include an EUR800 million decarbonisation-focused global equity brief with Ircantec one of France’s largest public pension plans. Meanwhile VBL, a large German pension plan, invested over EUR1 billion into NAM’s ESG-focused European Stars Equity Strategy as part of its responsible investment strategy, which includes a commitment to further reduce its carbon footprint.
And at the end of 2024, the California State Teachers’ Retirement System, one of the largest public pension plans in the world, selected Nordea’s sustainability-focused Global Stars Equity Strategy to manage USD450 million in global equity investments.
Crawford conceded that the Trump administration is not supportive of sustainable investment but argued there were still considerable investment opportunities that align with investors’ demand for climate-aligned strategies.
“Where we are today, we look at governments and broad country support and when it comes to ESG in Europe we still see that, but in the US, we probably don’t feel the same amount of support. And what makes it even more challenging is when US companies account for 60 per cent of an index, and if they are not getting support from policymakers that is really frustrating.”
He continued: “But there are opportunities with companies that are producing solutions to climate and environmental challenges. There are companies that are involved in the transition process from brown to green. So as much as the [anti-ESG] headline news doesn’t really help us, we are able to steer our ship in the right direction and capture these opportunities, and that goes across all different asset classes.”
Research from XPS Group published this March finds that three quarters of UK pension schemes have adopted net zero targets; up from 60 per cent last year. Meanwhile, 69 per cent have made asset allocation changes to address climate risks, which the consultancy said suggests that “climate risk analysis is driving changing investment decisions”.
