Investors begin to factor climate change into investment decisions

Institutional investors worth more than a trillion pounds are factoring climate change into their investment decisions, a Mercer survey shows.

The consultant surveyed 12 investors who participated in a previous report on climate change and represent almost $2 trn (£1.3trn) in assets under management.

It found that more than half had decided to consider climate change in risk management and asset allocation processes.

As the political solution to climate change falters following the Durban negotiations, Mercer global head of responsible investment Jane Ambachtsheer said climate change remained "a significant investment risk for the foreseeable future".

The survey found that 50% of the project partners have undertaken or plan to make changes to their actual asset allocations, 80% have or will increase their engagement on climate change with companies and policy makers, while more than half of participants either have - or plan to review - climate risks within climate-sensitive asset classes.

A third of participants have begun to or plan to allocate more to "climate sensitive assets" such as real estate, infrastructure and private equity.

Ambachtsheer added: "As expected, priorities and areas of focus differ among the partners, and in some cases, the findings have been used to support decisions which were already under consideration, such as an enhanced allocation to infrastructure investments."

One of the participants, The Environment Agency Active Pension Fund commented for the report: "The EAAPF plans to use this project and its findings to directly feed into the fund's regular investment strategy reviews by monitoring the funds exposure to climate change risk factors and strategic planning with regards to asset allocation,"

The survey follows a Mercer report published in February that analysed the potential financial impacts of climate change on investors' portfolios and was issued as part of the Investor Network on Climate Risk Meeting and Investor Summit on Climate Risk and Energy Solutions being held today and tomorrow in New York.