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Climate change on institutional investors’ minds: Cerulli Associates 

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In response to the increased attention to climate change risk, institutional investors, asset managers, and asset owners in the US are committed to implementing a variety of measures to address climate change and reach their net-zero goals, according to Cerulli Associates.

Cerulli’s finds while just 14 per cent of asset owners have a formal net-zero commitment, another 25 per cent plan to make one in the next 12 months. In addition to institutions making broad commitments to net-zero goals, Cerulli data reveals that many are taking other actions related to carbon, sometimes overlapping or tangential to the net-zero goal. Nearly one-third (30 per cent) of institutions are investing in strategies that support transition to a carbon-neutral economy, and another 36 per cent plan to over the next 12 months. 

Additionally, half of institutions are either divesting (29 per cent) or plan to divest (21 per cent) from fossil fuels. When undertaking responsible investment strategies, institutions continue to prioritise addressing the issue of climate change (61 per cent) as the top theme.

Despite these efforts, investors continue to face difficulties analysing and reporting on the carbon footprint of their underlying investment portfolios. The lack of data standardisation across third parties and publicly available tools makes it challenging for investors to get a clear picture of exposure and ensure alignment with their climate change commitments.

New platforms, including the Net-Zero Data Public Utility (NZDPU) database, are expected to come to market to establish more reliable, accessible, and comparable climate data across various industries for investors. “The development of such platforms will provide investors with more complete information about their exposure to climate-related financial risk,” says Gloria Pais, analyst. “Looking ahead, Cerulli anticipates an increase in industry partnerships with current disclosure platforms to enhance consistency and provide managers, investors, and other industry professionals with the data they need.”

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