UK investors have ‘weak’ approach to climate-change engagement, says report

Jan 16, 2020
LCP survey polled 137 investment managers

The approach of UK investment managers toward climate change is ‘worryingly weak,’ according to a new survey.

Only around half (52 percent) of the managers polled could give a ‘reasonably detailed description’ of their approach to climate-change engagement, finds LCP’s Responsible Investment Survey.

In addition, just 54 percent could provide a good example of recent engagement on this issue with an investee company, regulator or policy maker. 

‘This is barely a majority, despite the widespread pressure on institutions to respond to growing demands for a faster transition to a net zero-carbon economy,’ write the report authors. 

The survey, which takes place every two years, gathered the views of 137 investment managers. The respondents include most major UK institutional investors, says LCP.

The findings come as the buy side faces growing pressure to consider climate change as a critical part of investment decisions. 

Earlier this week, BlackRock CEO Larry Fink said in his annual letter to CEOs that climate change ‘has become a defining factor in companies’ long-term prospects’.

Meanwhile, the new UK Stewardship Code 2020 calls for asset managers and owners to report on their ESG integration – including on climate change – across all asset classes. Under the new code, investors will need to provide case studies of their engagement efforts to prove they are taking the requirements seriously. 

While the respondents to LCP’s survey struggled to explain their approach to climate-change engagement, there are other findings that point to a growing focus on responsible investment. 

For example, 88 percent of respondents say they are signatories to the UN’s Principles for Responsible Investment, up from 78 percent in 2018 and 66 percent in 2016. Furthermore, 81 percent of respondents say there is board-level accountability for responsible investment at their firm, compared with just 34 percent in 2018. 

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