In Charts: Asset owners confident portfolios will withstand climate change – in the short term, at least

A survey of large asset owners has revealed confidence in investments’ climate resilience for the year ahead, with a majority of those surveyed having already set climate-transition targets

A majority of large asset owners surveyed by consultancy Mercer say that their portfolios are prepared for the impact of climate change in the short term.

Mercer conducted a survey of 61 asset owners — comprising a mixture of pension funds, insurers and non-profits — from across the world with combined assets exceeding $2tn, between May 2 and July 30. It revealed that the vast majority of respondents see their portfolios as either “very resilient” or “fairly resilient” to climate change over the 12 months following the survey.

“Despite a highly uncertain market outlook, the confidence of this category of investor in the resilience of their portfolios is notable and, arguably, has potential implications for ongoing investor demand for risk assets,” said Mercer’s European head of investments, Eimear Walsh, in the report.

The majority of respondents have implemented climate-transition targets, with a higher percentage of those that oversee more than $20bn in assets having set climate goals compared with those that oversee assets below this threshold.

Climate change featured prominently in asset owners’ investment objectives, followed by references to net zero targets and labour practices. Less than half explicitly referred to the UN’s Sustainable Development Goals.

The report observed that large asset owners usually implement a 2050 timeline for science-based climate targets, rather than aiming for 2030. Fifty-two per cent of respondents have set such targets, but 47 per cent have targeted 2050 for their climate objectives, while just 5 per cent have set 2030 targets.

There was once more a clear division between asset owners exceeding $20bn and those below on this metric. Sixty-nine per cent of the biggest asset owners have implemented science-based goals, and 38 per cent of owners with $5bn to $20bn have followed suit.