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Report

Winning Climate Strategies

This report explores the climate strategy journeys of 22 leading asset owners in nine jurisdictions and presents a range of key findings covering the current best practices landscape, common barriers, and a practical framework of ten building blocks relevant for asset owners including large and small pension funds, sovereign wealth funds, charities, and foundations, at earlier stages of their climate strategy journeys.

Key points

Common barriers

Barrier 1: Data quality concerns
Nearly all respondents raised concerns about climate-related data quality, on a variety of levels. The topic of scenario analysis was also commonly raised due to concerns around a lack of clarity and expectations for asset owners, and the investment-relevance of currently available scenarios.
Barrier 2: Lack of momentum in regulation and policy
Another dominant barrier raised by respondents related to climate-related regulation and policy concerns, mostly at national levels. Some leading asset owners have  responded by prioritising policy engagement in their climate strategies.
Barrier 3: Perceived lack of low-carbon investment opportunities
Respondents offered mixed views around the availability of low-carbon investment opportunities. While some reported facing difficulties in finding enough investable opportunities, others noted they had faced no such issue. Some respondents also reported liquidity constraints as an issue where opportunities existed, in non-equity asset classes.
Barrier 4: Misaligned time horizons
Misaligned time horizons also featured as a barrier on a variety of levels, from the time horizons of different categories of climate-related risks to the time horizons between actors across the financial ecosystem (asset owners, asset managers, and investment consultants).
Barrier 5: Prevalence of traditional mind sets
Some respondents identified traditional mind sets as a barrier, such as investors who still consider ESG and financial performance as a trade-off, or trustees who still regard climate change as an ethical or political issue.
Barrier 6: Lack of confidence in asset managers
A lack of confidence in the climate-related stewardship or asset management services from the asset manager community was also identified as a barrier by a number of respondents.
Barrier 7: Language concerns
Some respondents noted concerns around the use of language and terminology in this field as a barrier, which have tended to be complex, historically focused and unable to connect with multiple audiences.