Asia-headquartered investors recognise coming climate risks, but face significant barriers to setting short- or medium-term climate targets and realigning capital flows at a speed that can mitigate economic and physical damages.
This is according to data analysed by the Asia Investor Group on Climate Change (AIGCC), which surveyed climate practices of 183 Asia-headquartered investors with US$33 trillion ($43.95 trillion) in assets under management (AUM).
Of the 183 investors, 56 are members of the AIGCC.
AIGCC’s report, which will be released in full in 1Q2024, reveals that Asian investors understand climate risks and opportunities, widespread formal climate disclosures and long-term target-setting.
However, only investors with US$8 trillion, or about 25% of total AUM, have set interim targets, and 20 investors with US$5 trillion in AUM have set targets to direct capital into renewable energy and other climate solutions.
AIGCC’s CEO Rebecca Mikula Wright says policy barriers have largely prevented these Asian investors from moving capital to mitigate climate risks in Asia. In order to improve capital flows, the right local policy conditions are required, she adds.
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“Commitments to triple renewable energy capacity and phase out fossil fuels, as proposed for COP28, are the kinds of policy signals that will attract Asian investors’ capital,” says Wright.
The 183 institutional investors mentioned came from the following markets: Brunei, China, Hong Kong, India, Indonesia, Japan, Malaysia, Pakistan, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.
According to the AIGCC, the full report will feature deeper and more granular analysis of investment practices in the region, including management of physical risk, best practices on corporate and political engagement, fossil fuels, deforestation and involvement in target-setting initiatives.
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While the project is sponsored by MSCI, the AIGCC says it independently performed the research design, data collection and analysis.
Formed in 2016, AIGCC works to create awareness and encourage action among Asia’s investors about the risks and opportunities associated with climate change. Its members include abrdn, AIA, Fidelity, GIC, MSCI, UBS and UOB Asset Management.
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