Fixed income fund managers should do more to influence corporate behaviour on climate change, according to a report from investor lobbying group ShareAction.
Researchers for the report Sleeping Giants – Are bond investors ready to act on climate change? included interviews with 22 specialist bond investors and asset owners and found that bondholders are generally reluctant to use their influence to press companies for stronger action on climate change specifically.
Bond fund managers said that investors have not yet established expectations on how they urge companies to manage climate related risks and said they have concerns about a lack of useful reported data on climate change and the impact climate change could have on businesses.
But in a statement accompanying the research, ShareAction suggested that bondholders should “assume a more ambitious interpretation of their fiduciary duties” saying that their clients face the prospect of financial loss if global temperatures are not managed to below scientifically agreed limits.
Report author, Wolfgang Kuhn, said that fixed income investors could do more to use their powers of influence.
“You can build your house on a hill to protect it from rising sea levels, but it won’t stop the sea from rising,” he said.
“Bond investors have come a long way very quickly on the sustainability dimension. What is left is to realise the power they have to create a positive impact and muster the courage to use it.”
Marie Lassegnore, a portfolio manager at asset management group La Française, agreed adding: “The report is right. The industry needs to induce change quickly if we want to get anywhere near 2 degrees. There is a lot of impact potential from asset managers not being utilised yet.”