The gap between asset managers’ climate assertions and evidence of action remains “painfully wide”, analysis from investment consultant Redington has revealed.
According to the firm’s Sustainable Investment (SI) Survey, out of the 127 managers engaged with and 281 strategies covered, although 86% of strategies measure climate-related risks and opportunities, only 38% of managers report using any portfolio alignment metric.
These figures are concerning, the firm said, given that large pension schemes must record portfolio alignment metrics in their TCFD reports for the first time this year.
This comes as just under a quarter (23%) of managers continue to hire based on climate resources, supporting disclosure and regulatory obligations and stewardship, on top of boosting research and development schemes.
Further, the survey revealed measurements of Scope 1 and 2 emissions are lacking. Some 20% of managers don’t measure the emissions of their portfolios, and a further 32% still don’t measure Scope 3 emissions.
Edina Molnar, vice president of sustainable investment at Redington, said: “In reflecting on where the industry was just three years ago compared with where we are now, we are encouraged by the general shift among managers to take climate considerations into account alongside financial factors.
“Nevertheless, there needs to be more evidence of actions and outcomes across the spectrum. The number of managers not measuring Scope 3 is particularly disappointing and begs the question of whether managers are truly integrating climate-related considerations into investment decisions.”
Oliver Wayne, head of manager research at Redington, added: “We will continue to engage with managers to discuss current barriers to progress and drive action in areas where it is evidently lacking. This includes assessing the feasibility of strategy-level decarbonisation targets and improving data quality across the board.”