Insurance investment managers and investment managers need more support on understanding the impact of different climate scenarios on their investments, a new global study* shows.
Around one in four respondents admit their organization’s current understanding of climate related impact is only average, while 76% consider their understanding of the impact of different climate scenarios to be good.
The study from Ortec Finance, involving investment managers responsible for $10.48 trillion AUM, found that more than 90% of respondents said they expected climate risk and impacting investing to become more important to their organization’s portfolio and investment strategy over the next three years. Nearly a third (29%) believe it will become much more important.
The research from Ortec Finance shows that nearly two-thirds of respondents allocate 4% of their investment portfolio to sustainable investments, such as green bonds, social bonds and impact investing.
A further fifth report that only 3% of their investment portfolio is dedicated to sustainable investments, while 1 in 6 estimate 5% of their portfolios is dedicated to such investments.
Ortec Finance’s ClimateMAPS produced in partnership with Cambridge Econometrics enables organizations to quantify climate change risks and identify opportunities, across all asset classes, macroeconomic variables and sectors.
It translates climate risk and opportunities across all asset classes into real-world assessments across macroeconomic variables, conventional and green benchmarks, regions and sectors - delivering a real-world assessment of systemic transition, physical and market pricing risks.
Hamish Bailey, Managing Director UK, and Head of Insurance & Investment said: “Climate risk and its impact on investing looks to become increasingly important among insurers. A significant number of organizations in our study acknowledge they need to do more, with many admitting their understanding of the potential impact of different climate scenarios on their portfolios could improve. That points to a growing need for stronger support and a more rigorous, forward-looking approach to managing climate-related risks and opportunities, now and into the future.”
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