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Net-zero knowledge gap no barrier to investment

ESG

What do investors really want?

  • This is the question asked by Ninety One, an Anglo-South African asset management firm in its latest Planetary Pulse survey. The survey spoke with more than 6,000 individual investors across ten countries including the UK, Germany, Singapore and the US, to understand their views on the pressure of Net Zero ahead of the COP26 event.

    The release of the report likely couldn’t have been timelier, with news that the National Party has agreed in principle to the Liberal Party’s net zero action plan. The policy had been a key driver of leadership changes for many years and may change the nature of the federal election.

    One of the more interesting takeaways from the survey was the very mixed understanding and knowledge of what “net zero” actually is, and what investing to support net zero actually looks like. How well do they understand what it means to invest with a net-zero focus? And are investors ready to adapt their portfolios to support the transition to a carbon-free world? These were the questions to which global asset managers will be paying very close attention.

    “By net zero, we mean achieving a balance between the amount of greenhouse gas emissions that we put into the atmosphere and the amount removed from the atmosphere, net zero being achieved when the amount added is no more than the amount taken away,” according to the report.

    According to the report, even looking beyond the differing knowledge levels, the concept of investing to achieve net zero had positive appeal with over 80 per cent of investors. However, many investors remain sceptical about their own ability to contribute to efforts to tackle climate change, with 61 per cent suggesting the worst polluters should be doing so.

    In fact, the largest cohort defined in the report were “confident enthusiasts,” as defined by Ninety-One, who are “net zero champions” but also NIMBYs, preferring this action to occur “not in my back yard.” “There is no point doing this (taking action) unless everyone does” is the among the most common views, suggesting there is still a long way to go. 

    The unique and global reach of the survey allowed for additional discussion and questioning around both views and intentions, with the survey suggesting that after some ten minutes of further discussion, investors quickly turned their views from simply “divesting higher-emitters,” to “staying invested and supporting companies to transition to net zero.”

    Half of those surveyed placed the pressure firmly on major asset managers, indicating their expectations that they would use their influence as shareholders to encourage changes in policies and their impact on the environment. This was confirmed by the fact that most investors weren’t against investing into oil, gas and mining companies on the basis of climate, but more so arms and weapons dealing, due to moral objectives.

    While the statistics reflect an increasing positive view towards more sustainable and net zero focused investing — in fact, more than 50 per cent suggested they would put a greater proportion of their wealth into investments with a net-zero focus in the next 12 months — the authors are also realists.

    Concluding, they highlight that the “incontrovertible and sobering fact about the drive to net zero — any effort that does not work for the world’s 7.9 billion people, will fail everywhere. To really save the planet, we must help emerging markets go green.”




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