Investors Push Fund Managers to Intensify Focus on Climate Fight

An $11-trillion investor group wants asset managers to orient a bigger chunk of their portfolios to tackle climate change.

Fresh guidance issued by the Net-Zero Asset Owner Alliance, whose signatories include large insurers like Allianz SE and pension funds like California Public Employees’ Retirement System, calls for members to work with asset managers that are seeking changes in climate policy and regulation, and to actively push companies to accelerate their decarbonization plans.

How asset managers signal their climate goals “is important, especially for policymakers,” said Patrick Peura, ESG engagement manager at Allianz Investment Management and co-lead of engagement at NZAOA, in an interview. “We would also like to see an increasing share of their portfolios committed, to really put their interests clearly in line with ours.”

NZAOA said it released the latest guidance for members in anticipation of various resolutions being tabled in the forthcoming proxy season. A March report by As You Sow, Sustainable Investments Institute and Proxy Impact says at least 542 resolutions have been put forward on environmental, social and sustainable governance issues.

Almost half of North America’s biggest institutional and wholesale investors worry they’ll face legal consequences if they consider environmental and social factors, while those in Europe and Asia are more fearful of the consequences of not addressing climate change, a March survey by Robeco found.

Members of NZAOA have pledged to honor the Paris climate agreement, and consider climate action to be part of fiduciary duty, according to Peura. The alliance advised members last month to halt direct funding of any new investments in fields, pipelines or power plants fueled by oil or gas.

“Insurance companies and pension companies have signaled that climate change is potentially detrimental to our core businesses,” he said. “We’re doing this to protect our businesses, our portfolios, and to achieve real world decarbonization.”

The United Nations’ Intergovernmental Panel on Climate Change warned last month that deep emissions cuts are needed to limit warming to 1.5C (2.7F).

To contact the reporter on this story:
Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net

To contact the editors responsible for this story:
Tim Quinson at standards@bloomberg.net

Gautam Naik

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