There has been accelerated integration, rising appetite for climate and net zero transition aligned investments, as well as more streamlined approaches to investing in climate solutions, Asia Investor Group on Climate Change (AIGCC) found in a survey, released this week.
With the emergence of international climate initiatives and frameworks that call for net zero as a baseline for action, there are clear signals that investors are embracing the numerous tools and frameworks to reach such targets, according to the report.
Most Asian asset managers surveyed by AIGCC indicate that they have or are in the process of launching climate-related investment solutions, with an overall increase in respondents noting that they have a wide range of existing climate-related investment solutions and are looking to launch more.
“It’s a promising sign that more climate-aligned investment products are coming to market, and that investors are alert to the dangers of greenwashing,” AIGCC chief executive Rebecca Mikula-Wright said.
“Progress reporting will be key to keep up the accelerated momentum and monitoring of climate integration in the region. It will also ensure investor accountability against commitments and frameworks as global market expectations around the transition to net zero economies increase,” she added.
This year, a total of 20 participants representing over $6trn of global AUM responded to the 2021 survey, with insights gathered from a mix of asset owners and managers active in Asia. Additional qualitative information was also sought to enable participants to provide further depth to their responses.
Asian investors highlighted a significant increase in commitments to net zero emissions over the past year. 40% of respondents have made portfolio-wide commitments, where there were none in the previous year. 20% of respondents have also made specific asset classes commitments to net-zero emissions by 2050.
Investor accountability has also become a more prominent topic that ties executive remuneration to climate metrics. 45% of Asian investors indicated that their organisations are actively considering this matter, with 5% already taking action.
However, the lack of tools to measure and report on “green impact” remains a primary concern for Asian investors, which could be a result of imperfect market information and lack of alignment in green taxonomies across different Asian countries and internationally, according to AIGCC.
But, the decrease in this complaint (from 56% in 2020 to 45% in 2021), suggests that more tools and guidance are starting to ameliorate this issue, AIGCC suggested.
Whereas the lack of clear definitions for low carbon or green investment was a top barrier in 2020 (33%), fewer respondents (20%) identified this as a barrier to investment in 2021, indicating that increasing collaboration and continued discussions on the subject, including through international forums such as the Paris Aligned Investment Initiative, has provided better clarity among Asian investors, AIGCC concluded.