A survey by climate change think tank E3G has revealed that the majority of institutional investors are concerned about the impact of climate change on their investment portfolio.
Of those surveyed, 82% expressed concern about the impact of climate-related risks on their portfolios, while 40% have already sold assets or reduced holdings in an asset to avoid the impact of climate-related risks to their portfolio. Additionally, 46% of respondents have avoided investing in an asset due to its exposure to climate-related risks, something which E3G notes is particularly worrying for the UK, where low investment has been a major factor in slow economic growth and a slower-than-ideal growth of renewable energy assets.
Furthermore, the message from institutional investors is clear: reducing exposure to climate-related risk is key to boosting investment. Around 76% of investors said they would be encouraged to invest more in the UK if climate-related risk was reduced, with 88% stating they would be more likely to invest in a specific sector if it was covered by a government sectoral investment plan.
A further 88% say they view climate transition plan disclosures as useful for investment decision-making, as these plans provide stakeholders with information on how a company will meet climate targets and aid the national net zero transition.
E3G notes that climate change triggered catastrophes, such as extreme weather events, cost the world around US$320 billion (£257.5 billion) in 20204, which was the hottest year on record.
For its part, the UK government has been working to encourage green investment, primarily through the establishment of the National Wealth Fund by chancellor of the exchequer Rachel Reeves in July last year. Over £7 billion was immediately made available by the fund to allow green investments to begin immediately, helping to allay concerns by many that the UK’s energy sector is a victim of significant underinvestment.
More recently, the National Wealth Fund announced that it would fund a £55 million investment into electric vehicle (EV) charging operator Connected Kerb in order to boost the rollout of EV chargepoint infrastructure, something that Connected Kerb CEO Chris Pateman Jones called “game-changing”. A further £10 million investment into Connected Kerb will be provided by Aviva Investors, a firm which in 2022 committed £110 million to deliver 190,000 on-street EV chargers by 2030.
