Third of investors put CO2 reduction over returns

Global survey finds one third of investors drawn to a divestment approach while half prefer engagement to reduce carbon emissions.

Nine in ten investors are happy for their money to play a part in reducing carbon emissions and nearly one third, 32%, said this would suit them regardless of return, according to a survey by asset manager Ninety One.

Of those responding to the Investing for a Carbon Free World: What Investors Want survey, 45% said they also expected a competitive financial return from their investment while it was working to reduce carbon emissions.

A total of 12% of investors of the 6,034 surveyed said either their money should be invested only to make a return and not for positive environmental impact or said investing to reduce emissions would be likely to bring them a lower return.

The global survey also gauged individual investors’ understanding of and attitudes to net zero carbon emissions.

Ninety One found one in five investors are familiar with the principle of net zero and “net zero investing”. Despite many not being familiar with the term, a majority of investors, four in five, said reducing carbon emissions should be encouraged and they were happy for their money to focus on net zero. Net zero investing had no appeal for less than one in 10 of those surveyed.

Over half, 52%, of respondents said they were most drawn to a net zero approach where investment managers and asset owners engage with companies to reduce carbon emissions, while 32% said they preferred a divestment approach.

Deirdre Cooper, Ninety One co-head of thematic equity noted there is a clear trend in investor preferences: “The climate crisis presents both tremendous opportunities and risks to investors. This survey makes clear that investors across the globe are looking to allocate capital to funds which invest in companies and countries that are working towards a sustainable future.”

Cooper also said solutions to the climate crisis will not be found in a divestment approach: “The investment management industry has an integral role to play in tackling the climate crisis in the real economy, and this cannot be met by providing investment capabilities to investors which tilt towards asset-light sectors, moving capital out of emerging regions, or selling assets to less responsible owners and outsourcing. It is our responsibility to provide end investors with solutions which can counter the climate crisis.”