Insurance companies stand out for making a net-zero commitment compared to other institutional and wholesale investors, perhaps driven by their unique exposure to climate change from both sides of the balance sheet, according to Robeco’s fourth annual Global Climate Investing Survey 2024 of 300 investors.
Around 39% of insurers have made a public commitment, and another 20% are in the process of doing so. Regionally, North American investors are more likely to be ‘commitment-phobic’; nearly half (46%) have ruled out a commitment to net-zero, up from 26% last year.
The study's reveal of wide regional differences in attitudes towards climate investing saw the Asia-Pacific (APAC) region powers ahead while interest in North America lagged behind.
The number of APAC investors for whom climate change is central to, or a significant part of, their investment policy was 79%, surpassing Europe (76%) for the first time.
Enthusiasm, however, continued to fall in North America amid political wrangling over the perceived cost of integrating environmental, social and governance (ESG) factors into investments, where only 35% prioritize climate investing. This knocked back the global average to 62% from 71% in 2023, but still signals that a majority of investors have climate investing as a priority.
Lucian Peppelenbos, climate and biodiversity strategist at Robeco said: “When we look at the survey findings, we can see that many investors are adopting a focused and diligent approach to the work of decarbonizing investment portfolios and moving towards the low-carbon economy of the future. As they get to grips with the hard work involved in the climate transition, there is less naivety, and more careful deliberation and scrutiny over what is needed to embed sustainability into the many aspects of running investment portfolios.”
Over three-quarters of investors expect the transition to be disorderly in some way, with too little done collectively. Only 15% expect an orderly transition in which governments and markets work together to cut emissions, and 8% expect a ‘hot-house world’ in which very little action is taken to avoid global warming. On this note, fewer investors believe that the core Paris Agreement 2 degree goal can be achieved. Just 30% think this is possible compared to 38% in 2023, while 41% think it is not achievable, up from 30% the last time.
Investors are currently allocating more funds to general climate strategies rather than those focusing specifically on 'transitioning' companies. Only 37% are investing in strategies targeting companies with credible transition plans, although a majority (63%) plan to do so in the next one to two years. The transition issue has a bearing on the investment styles preferred.
Some 45% are using active equity strategies that specifically target allocations to transition-oriented companies, while 43% are investing in green bonds or sustainability-focused bonds. This approach is again more popular in Europe and APAC.
Peppelenbos added: “The transition among corporates and others from brown to green, as they decarbonize, cannot take place without the active involvement of investors, rewarding those making the change and withdrawing support from the unwilling or reluctant. One interesting facet of this year’s findings is how investors in the Asia-Pacific region are forging ahead on sustainability, as they increase their support for the climate transition.”
