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Climate Change and Asset Owner Investment Strategies

A study reveals how climate change is reshaping asset owner investment strategies in Europe, the Middle East, and Africa, highlighting key drivers, challenges, and approaches to ESG integration and stewardship.

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Climate ChangeEuropean UnionEnergy SecurityInvestmentSustainabilityEsgClimate RiskStewardship

State Street Global AdvisorsVarma Mutual Pension Insurance Company

How are asset owners approaching stewardship and engagement with companies regarding climate change?: A growing number of asset owners see a fiduciary duty to integrate ESG factors and actively engage with portfolio companies on climate-related issues. They focus on monitoring companies' environmental disclosures and decarbonization plans rather than demanding specific actions.
What are the main challenges and concerns asset owners face when investing in climate-related opportunities?: While there's significant interest in climate-related investments, challenges remain, including concerns about reduced returns and increased volatility, data transparency, and difficulty in measuring the positive impact of such investments.
What is the main finding of the State Street Global Advisors study regarding asset owner investment strategies?: The study by State Street Global Advisors reveals that climate change and the green transition are significantly impacting investment strategies of asset owners in the EMEA region, with a notable increase in professionals integrating these factors into their decisions.
What are the key factors driving asset owners to integrate climate change considerations into their investments?: Key drivers for this shift include evolving regulations (like the SFDR), the need to mitigate investment risks associated with climate change, and the pursuit of potential investment outperformance opportunities in sustainable sectors.
What types of risks are asset owners primarily concerned about regarding climate change and how are they responding?: Asset owners are increasingly assessing physical climate risks (like floods and wildfires) and reputational risks related to sustainability performance. Many are planning investments in climate-related themes, particularly renewable energy, within the next 12 months.

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