The world’s largest asset managers, except those in Europe, are missing the mark on tackling biodiversity loss, and climate change, according to ShareAction’s new report – Point of No Returns 2023 Part IV: Climate and Biodiversity.
The shareholder advocacy group collected data between July and November 2022 from 77 asset managers with a collective $77 trillion in assets under management. It looked at their policies and practices on climate and biodiversity, including an assessment of risks and opportunities, and disclosure.
The report revealed that only ten, all European, have committed to restricting investment in the most harmful of fossil fuels in their funds. Most are also not investing enough in low-carbon energy opportunities..
In addition, almost all the asset managers now have long-term net-zero targets, but there is incomplete coverage of assets or omissions of Scope 3 emissions with only 8% measuring and setting climate targets.
As for biodiversity, three-fourths of the managers had no commitments to protect ecosystems from deforestation.
While most of them had some assessment of biodiversity risk, few used the information to inform policies and targets, and few committed to address it, the report said.
“Asset managers’ recognition of the importance of biodiversity has grown since our 2020 survey, but their responses to the biodiversity crisis remain considerably weaker than their responses to climate change,” the report said, and in many cases, “firms have not yet understood the links between these issues.”
“There’s an absence of positive investment and huge gap between words and deeds, said Abhijay Sood, financial sector research manager at ShareAction.
He added, “There is very limited commitment in terms of sort of restricting harm to natural habitats.
We found that only about a quarter of asset managers have a deforestation commitment, and none have commitments to protect other types of natural habitat, and only 10 asset managers – all Europeans – without fossil fuel expansion.
Given that the IEA and the IPCC among others is saying we can’t have any new oil and gas, that’s a that’s a big problem.”
The report is the latest in a series on the asset management community which shows firms are not aligned with the world’s leading scientists and the UN when it comes to emissions and net-zero.
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