Appetite for climate-aligned investment grows in Asia
Decarbonisation strategies, portfolio tilting trend up, away from climate risk
23 Feb 2021 | The Asset

Asian investors are adopting more sophisticated strategies and tools to manage climate change risks and have a large and growing appetite for climate-aligned investments, according to a recent survey.

The Net Zero Investment in Asia survey by the Asia Investor Group on Climate Change canvassed the views of regional investors from organisations collectively representing over US$1.9 trillion in assets under management across November and December 2020. Asset managers and owners (including insurance firms, and government pension and sovereign wealth funds) were among those surveyed.

The survey found an upwards trend in the use of decarbonisation strategies (more than 40% of respondents) and portfolio tilting (more than 35% of respondents), suggesting that investors are more actively managing portfolios to pivot away from assets facing climate risk while capitalising on net-zero carbon emission opportunities.

Asian investors are also increasingly (70% of respondents) considering the adoption of portfolio-wide decarbonisation goals for their portfolios but are currently lagging their international counterparts in formally integrating these targets.

The survey also found that reporting via the Task Force for Climate-related Financial Disclosures recommendations remains high, with 50% of respondents already disclosing against the framework and another 30% actively considering it.

Asian investors are more widely conducting carbon footprint analysis on assets, particularly in listed equities (79% of respondents in 2020 versus 19% in 2019) and fixed income (74% or respondents in 2020 versus 11% in 2019).

More than 70% of respondents said that the disruption of the Covid-19 pandemic had not affected their organisation’s progress on climate change.