Investors Analyze Climate Risks and Opportunities: A Survey of Asset Manager Practices

Ceres conducted a survey in early 2009 of the world’s 500 largest assets managers, according to the 2008 Pensions and Investments Survey, to learn how they are responding to climate change trends and how they are considering climate risks in short- and long-term decisions. Ceres considers climate risks a key example of environmental, social and governance (ESG) risks, and while this survey was focused specifically on climate risks, many of the findings and recommendations are also be applicable to other ESG risks.

The report highlights specific best practices that asset managers are using to incorporate climate risks into their due diligence, corporate governance and portfolio valuation. It also outlines questions that institutional investors can be asking asset managers — in requests for proposals (RFPs) and in annual performance reviews —  to better ensure that managers are giving climate change risks and opportunities the attention they deserve.

In summary, the survey found only a few asset managers — MFS Investment Management and F&C Asset Management plc, among those — that are including climate risks and opportunities throughout their investment analysis — in their asset allocation, portfolio valuation, and corporate governance due diligence.

Like companies that are rethinking and retooling their business strategies in response to climate change, these asset manager leaders are positioning themselves to capture the opportunities and understand and manage the risks of climate change across their portfolios.