Asset managers must do more to tackle nature and climate crisis – campaigners

(Andrew Milligan/PA)
(Andrew Milligan/PA)

Major asset managers must do more to safeguard the world’s ecosystems and tackle the climate crisis, campaigners have warned.

A report from ShareAction, which campaigns for responsible investment, assessed 77 of the largest asset managers in the world, including UK firms like Legal & General, HSBC, Aviva, Fidelity and Schroders.

It said very few are addressing the nature crisis and there is limited integration of the issue in policies.

Only a quarter of the asset managers had committed to protecting natural ecosystems from deforestation and none had committed to other types of natural habitat conversion, the analysis found.

Nearly half had no sector policies for biodiversity while only two-fifths monitored whether investee companies operated in areas of biodiversity importance.

Despite all asset managers committing to long-term net-zero targets – ensuring they have cut carbon pollution to zero by certain dates – the report suggested they are not doing enough to avert the climate crisis.

It said only 10 asset managers – all in Europe – had committed to restrict investment in the most harmful fossil fuels across all their funds.

In many other cases, net zero commitments only covered some funds and left out Scope 3 emissions – all the emissions from the products a company sells.

ShareAction warned that this could mean asset managers’ short-term targets on climate will not be enough to meet their long-term net-zero goal.

The campaign group is recommending that asset managers develop and publicly disclose dedicated biodiversity and climate policies.

It is also recommending they engage investee companies to create positive change and publicly disclose 2050 net-zero targets that are consistent with a 1.5C Paris-aligned trajectory.

Claudia Gray, head of financial sector research at ShareAction, said: “It is frustrating to see that the world’s largest asset managers are still barely waking up to the current scale of destruction of the planet and its species.

“This is not a time for business as usual. It is the responsibility of asset managers to recognise major threats like ecosystem collapse and spiralling temperatures, and respond to the risks they present.”

Ms Gray said many are not checking whether the companies they invest in are impacting nature and that commitments to protecting forests are “crucial for providing clean air, clean water and helping the fight against climate change”.

She also said there is a “significant gap” between words and deeds when it comes to short-term targets.

“For the managers who have interim targets, these often apply only to a small number of funds,” she said.

“Further watering these targets down are loopholes and reporting that doesn’t directly measure absolute, real-world reductions in emissions.

“Asset managers need to set strong, effective and comprehensive net-zero targets. Anything short of this suggests a lack of ambition to meet net-zero goals.”