Global investors care more about reputational than climate risk'

Study shows their understanding of threat does not match investment decisions made

- David Fogarty

Executives at many of the world's largest investment firms are more concerned about reputational risk to their company than the climate impacts of the companies they invest in, according to a survey released on Feb 5.

The findings show a worrying disconnect between executives' understanding that climate change is a threat and investment decisions that fail to match that concern.

"Most CEOs and executives are very concerned about climate change, but they are not doing enough to ensure that the soaring climate risks they face are incorporated into their investment decision-making," said report author Rose Tehan, an analyst at Australian activist group Market Forces.

"Corporate leaders and investors must make better choices for their companies to prosper," she told The Straits Times.

Climate risks include direct impacts of worsening weather extremes on companies' assets and supply chains, such as floods, storms and wildfires. They also include risks from tougher regulations such as taxes on carbon pollution or tighter emissions controls on transport.

Market Forces and market research agency NewtonX conducted the survey of 150 chief executives, other executives and investors at 100 of the world's largest financial institutions in Britain, the United States, Singapore, Japan, Australia, Hong Kong and Belgium.

The online survey, done from September to November 2023, mainly involved banks, asset managers and pension funds with a minimum of US$20 billion (S$26.9 billion) in assets under management. Just over half of the respondents were in the United States, 28 per cent in Britain and 19 per cent in the Asia-Pacific region.