Asset managers defend role in response to 'stark reminder' of IPCC climate change report

In 'last decade' to make change

clock • 3 min read
Asset managers reinforced their commitment to fighting climate change
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Asset managers reinforced their commitment to fighting climate change

Asset managers flocked to raise their concerns following the findings of the UN climate change report, emphasising their own role in fighting the climate crisis.

The study, by the UN Intergovernmental Panel on Climate Change, collated and reviewed information from more than 14,000 studies and found that the global surface temperature was slightly over one degrees celsius higher in the decade 2011-2020 than all of 1850-1900, with the past five years being the hottest on record.

While the damning 3,949-page report was overwhelming to many, Eoin Murray, head of investment at the International Business of Federated Hermes, highlighted that there was hope to be found in it.

"The most important piece of the latest IPCC report must be that we are today in our last decade to take the necessary actions to avoid the horrors of predicted climate change, and that it is still within our gift to make the required changes," Murray explained.

UN calls on investors to back low-carbon future amid "code red for humanity" alert

Buoyed by the twinned emotion of desperation and hope, he and others from the industry swiftly highlighted the role investors have to play.

Randeep Somel, manager of the M&G Climate Solutions fund, said the conclusion "could not be clearer".

"This report should hopefully be a stark reminder to all the leaseholders of our planet, be they consumers, industry or governments, that action needs to be taken sooner, and that we all have our part to play," he exaplained.

Somel, along with Robyn Grew, Man Group's COO and head of ESG, stressed the importance of a transition to a net-zero economy as soon as possible.

"As investors, we need to continue pushing companies to adopt science based targets for their own emissions," said Somel. "We need to encourage highly pollutive companies to transition their business models to more sustainable paths, and we also need to channel capital to those companies that are researching and providing the climate solution tools that we all need to adopt."

This action should not be done in an isolated manner, according to Grew, who believes collaboration is vital.

"Many have done so already, but we would encourage all asset managers to sign up to the Net Zero Asset Managers initiative as a first step," she said.

The Net Zero Asset Managers initiative was launched in December 2020 and has 128 signatories, with a combined £43trn in assets under management.

Gemma Woodward, director of responsible investment at Quilter Cheviot, said the report should spur investors to "consider sectors such as renewable energy infrastructure" if they want to support the global ambition.

CFA Institute launches climate change analysis guide

Other asset managers were also quick to point out the research also highlighted increasing commercial and regulatory reasons for companies to change and therefore for investors to be interested in climate change.

Andy Pitts-Tucker, managing director of Apex Group ESG Ratings & Advisory, said he was encouraged to see the conversation evolve "beyond the moral argument".

Similarly, Dr Michael Urban, senior sustainability analyst, and Dr Christopher Kaminker, head of sustainable investment research and strategy at Lombard Odier, said the report "solidifies the importance" of thinking about climate transition, physical and litigation risks in their decision-making.

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