More Than Half of US$1.9 trillion Asian Investor Group Mull Net Zero by 2050

Survey suggests growing appetite is being blocked by lack of investable opportunities.

As many as 70% of Asia’s institutional investors are considering whether to set 2050 net zero emissions targets even though actual commitments are currently lacking, a new report has shown.

The report was published by the Asia Investor Group on Climate Change (AIGCC), an investor initiative seeking to encourage climate-aware investments.

From November to December 2020, the group surveyed Asian institutional investors and asset managers representing over US$1.9 trillion in assets under management (AUM).

AIGCC Executive Director Rebecca Mikula-Wright commented that the survey sends a “clear signal” to Asian policymakers on the investment appetite in the region.

“If [Asian policymakers] create investable opportunities, there is significant private capital interested in supporting and accelerating the transition to net zero emissions,” she said.

But while Asian investors are positioning themselves for the transition, they also “need to ensure they are keeping up with international best practice on climate change across all areas, including integrating portfolio-wide decarbonisation goals”, she added.

Meanwhile, among climate-aligned strategies, the survey found a significant increase in the usage of decarbonisation strategies (above 40%) and portfolio tilting (over 35%) in 2020 compared to 2019.

The application of positive/best-in-class and emission reduction goal related strategies however slightly dropped in 2020.

Among other findings is that many clients have set climate targets for specific portfolios, even though most remain internal only.

The survey highlights further key points on reporting and measurements.

Over 50% of respondents already report against the TCFD, including scenario analysis, and more than 30% of respondents actively consider to do so.

Moreover, a significant growth in carbon footprint analysis was seen, particularly in listed equity (79% in 2020 vs 19% in 2019) and fixed income (74% in 2020 vs 11% in 2019).

The report identified besides the perceived lack of opportunity as a significant barrier to green or climate-aligned investments a number of other inhibiting factors.

Investors hold also back from investments because of the lack of tools to measure and report on ‘green impact’.

“This could be a result of imperfect market information and uneven green taxonomies being used in different countries,” the report writes.

Adding to this comes policy or regulatory uncertainty and a lack of clarity on what defines a green investment.

The report also said that more than 70% of surveyed investors said the pandemic has not impacted progress on climate change investments or the development of climate-aligned solutions.

This report is the first in a series on scaling up low and net zero carbon investment going forward, the AIGCC noted.

The initiative has 49 members from 11 markets representing over US$13 trillion in AUM.

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