Luxembourg Report 2021

IAM Newsletter 29/10/21

institutional asset manager maddy taylor captioned.jpg The world’s largest asset manager, BlackRock, is highlighting climate and natural capital themes in more than half of its engagements with companies, as investors are urged to use their influence to push for positive change.

Climate change and the environment have risen up asset managers’ agendas while inflows to ESG funds have continued to increase. Sustainable funds reached USD35 trillion assets under management by the end of 2020.

According to BlackRock, environmental issues came to the fore in 58 per cent of its engagements in the period from 1 July to 30 September, during which it engaged with companies covering a fifth of its client equity assets.

Almost a quarter of large asset managers have set net zero targets for their investments, according to research from NN Investment Partners (NN IP)

Asset managers mentioned CO2 emissions in 33 per cent of their ESG-related publications in 2021, compared with only 6 per cent five years ago.

Nevertheless, pension funds are being accused of fuelling the climate crisis by financing the worst polluting companies. For every GBP1,000 invested by UK schemes, GBP60 is estimated to be invested in the fossil fuel industry, according to an analysis by Make My Money Matter and Route2.

The majority of leading UK schemes have not made robust net zero commitments, leaving almost GBP2 trillion invested in schemes which are yet to align with the Paris Climate Agreement.  

Simply setting net zero targets may not be enough information for investors wishing to limit their climate risk exposure, according to ESG fixed-income investment manager Cameron Hume. Hume explains that the path to achieving a net zero target is as important as the target itself, and that investors should consider the risk that a company will fail to meet its target.

Madeleine Taylor
Editor, Institutional Asset Manager


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