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Laxman Pai, Opalesque Asia: European pension funds are earmarking more money to be invested in climate-linked passive assets, as a survey of pension plans finds that over half still have no allocation at all toward the asset class.
According to DWS-sponsored survey by consultants CREATE-Research, 65% of pension funds intend to increase their climate-linked passive allocations over the next three years.
The study, which covered over 131 pension plans in 20 jurisdictions with a combined AUM of around EUR 2.25 trillion, shows climate-linked investment has become embedded in passive asset allocation: 26% of plans said they commit over 15% of their passive funds to the segment.
However, just over half (56%) still have no allocation at all as part of their passive investments, and 60% say they are constrained by data and definitional problems.
A full 70% of plans examine the capacity and track record to fulfill a 'green' agenda when choosing an asset manager for climate-related investments.
"This survey shows how sustainability is moving up the agenda for pension funds globally, and how it is being worked into broader moves to embrace passive investment solutions," said Simon Klein, Head of Passive Distribution, Europe and Asia-Pacific, at DWS.
Climate-linked passives are taking their place in a growing passive thematic investment field.
The survey also found that 57% expect overall ESG allocations to grow more than 5% per annum over the next 3 years.
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