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Institutional investors gearing up for a surge in decarbonization target-setting

Friday, November 12, 2021

Laxman Pai, Opalesque Asia:

Institutional investors are increasingly setting decarbonization targets and taking stronger measures to address climate risk through all asset classes, said a study.

According to a survey by State Street Global Advisors (SSGA), 20% of investors globally have committed to a specific portfolio decarbonization target, but a further two-thirds say they will introduce them within the next three years.

The report is based on the views of more than 300 institutional investors with assets ranging from less than $1 billion to more than $20 billion, revealed that nearly half - 44% - cite their responsibility to drive the economic transition and help to solve the global climate crisis as their top motivator for climate investment strategies, slightly ahead of creating outperformance (41%) and mitigating investment risk (36%).

The majority of asset owners are taking deliberate action to reduce the carbon footprint of their portfolios. In total, over three-quarters (77%) of respondents were already taking (either targeted or non-targeted) action on decarbonization. It was not a focus for a mere 9% of respondents globally.

Almost three-quarters of European and APAC investors say they will introduce a defined portfolio decarbonization target within the next three years, and over three-fifths of North American investors intend to do so.

Decarbonization targets are set to surge across all regions over the next three years, said the report. Asset......................

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