18 August 2021 IGGC’s recent investor survey provides insights into how Australian and New Zealand investors are responding to climate risk and net zero investment opportunities, representing collective views of Australian and New Zealand investors with funds representing over AU$3.1 trillion total assets under management globally. Surveyed in June 2021, investors include superannuation funds, asset managers and sovereign wealth funds.
Highlights from the survey include:
- An increase in targets for green investments: Over 40% of respondents have made portfolio-wide commitments to net zero emissions by 2050, up from 27% in 2020. Interim emission reduction targets are quickly catching up with longer-term targets. In our first year of data gathering in 2017, 30% of participants indicated targets had been set at the portfolio level, although some of these were still internal. There are also a number of investors ‘actively considering’ interim commitments across all asset classes, so one to watch for next year.
- More TCFD disclosures but still a need for mandatory reporting: A significant uptick from 2020 shows that the majority of respondents are now reporting against the Taskforce for Climate-related Financial Disclosures (TCFD) recommendations, at 55%, up from 38% last year. While this represents a 45% increase in disclosure against the TCFD recommendations from 2020 levels, the total number of TCFD disclosures is still too low and the need to push investors to disclose is critical. Overall, climate reporting and disclosure continues to lag expectations, which highlights the need for mandatory reporting.
- Climate policy uncertainty remains a key barrier for investors, along with a lack of appropriate investment opportunities: These barriers continue to provide challenges for investors to easily deploy capital. 70% of investors highlighted policy uncertainty as a key barrier to investment, up from around 30% in the last survey.
- Just transition and social dimension increase: The trend for investors to focus on the social dimension of climate change has increased to 75%, up 24% from 2020. As the implications of decarbonising the economy becomes clearer, investors are more aware of the impact communities face with the need to transition, as well as the opportunities this creates.