Some 94% of institutional and wholesale investors with net-zero goals remain committed to climate investment despite ongoing political backlash, according to Robeco’s sixth Global Climate Investing Survey.
The survey, which comprised more than 300 investors across Europe, North America, Asia-Pacific and South Africa, found 27% of respondents have chosen a quantitative investment goal for climate-related assets, while 51% have allocated at least 10% of their investments. Some 60% also expect to increase allocations to investments tackling climate change over the next three years.
These numbers contrast with “realism” about the achievability of net-zero goals. Of the respondents, 47% concluded that the transition to net zero would be “too little, too late”, while another 28% said that the transition would be “disorderly.” More seriously still, 44% believe that meeting the Paris commitments will be “unachievable.”
Investors also expressed concerns that climate change will impact physical assets, with 66% expecting a moderate or significant impact over the next five years – rising to 88% in a decade.
However, concerns about achievability have not detracted from investor climate commitment. Respondents continue to support investment in both climate mitigation and climate adaptation and resilience.
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This commitment is partially explained by growing confidence in the returns brought by climate-related investment. Globally, 47% of respondents rate climate adaptation solutions as attractive risk-adjusted investments, while 44% consider climate mitigation opportunities attractive. However, the US lags significantly, at 40% and 36%, respectively.
Geopolitics and energy security concerns have also influenced investor sentiment. Some 60% of global investors believe that the conflict in the Middle East will “moderately” accelerate the climate transition, with substantial percentages of European and Asian investors willing to state that the conflict would “significantly” increase the pace of change.
Lucian Peppelenbos, climate and biodiversity strategist at Robeco, explained: “there is a growing realism that the transition is driven by hard economics and hard geopolitics. The drive for energy security is benefiting investments in areas such as renewables, battery storage and grids.”
Respondents noted that the most significant barrier to environmental investment was perceived “uncertainty” in government support, with 45% citing the issue, rising to 48% in Europe.
The study also concluded that investor attitudes towards climate-related assets have matured within the Gartner Hype Cycle, moving away from “inflated expectations” and resultant disillusionment towards the more realistic “plateau of productivity”.
Alison Ewings, general manager ESG, Queensland Investment Corporation, Australia, said: “Globally, investors probably sit on the cusp of the trough of disillusionment into the slope of enlightenment. Exactly where individual investors are on that line depends on their own approach and the geographies and markets they operate in.”
