Thirty-two percent of investors are happy for their money to be used to reduce carbon emissions, regardless of return.
Ninety One has published the second edition of the Planetary Pulse survey, Investing for a Carbon Free World: What Investors Want. The survey of more than 6 000 individual investors across ten markets (UK, Germany, Italy, Denmark, Sweden, South Africa, Singapore, Hong Kong, US, and Canada) found that investors are ready to support the drive to net zero, with half stating that asset managers should use their influence as shareholders in carbon-heavy companies to help facilitate the reduction in carbon emissions. This suggests that investors are ready to use their wealth and influence to invest in sustainable solutions which assist in the drive to reach net zero.
Based on their answers, respondents fell into four broad investor personalities when they thought about investing overall and sustainable investing specifically. Despite a clear knowledge gap, the concept of investing to achieve net-zero has positive appeal for four out of five investors. However, many investors remain skeptical about their ability to contribute to efforts to tackle climate change, with 61% stating that they feel the worst polluter should be tackling the issues.
In the South African context, almost two thirds of the 1 109 investors interviewed had at least some
knowledge about net zero. 80% indicated that the principle of net zero appeals to them, and 74% believe it
is the most effective way of slowing or stopping climate change. However, they feel it’s more complicated
than it appears: 51% believe there’s no point working towards net zero unless every country does; 62% feel
that simply reducing carbon isn’t enough – we also need to extract carbon from the atmosphere; and 54%
believe that the consequences of simply getting rid of heavy carbon industries haven’t been properly
South African respondents were split in their views about their personal impact on the issue, with 58% believing that the onus should be on the worst polluters to tackle climate change and 36% of the opinion that net zero is a pipe dream that will never be achieved. In addition, there seems to be little consensus about the status quo of net zero across respondents, with 58% saying they see little action being taken anywhere with regards to net zero, and 61% now seeing a real focus on net zero and climate change across business and government.
While 65% of South African respondents believe that less than half of their portfolios are invested in companies or funds that are helping the world to achieve net zero, 65% said they would increase that proportion over the next 12 months. Interestingly, 67% of respondents felt that investment managers can drive the move to net zero by using their influence as shareholders to help companies reduce their use or production of carbon, while only 21% felt that divesting in companies that are high carbon emitters would help to achieve this goal.
Globally, it is evident that divesting from high emitters will create significant risks and inescapable consequences for emerging markets, starving them of capital. While nearly half (49%) of all investors were able to see the negative impact divestment will have on the developing world, there is more conversation needed to raise awareness regarding the allocation of capital to ensure an inclusive, global transition to net zero.
Encouragingly, these findings confirm the growing global movement to create long-term, impactful changes to tackle climate change and shift to investing for net zero, with nine out of 10 global investors and 77% of South African investors stating that they believe that reducing carbon emissions should be encouraged and are happy for their money to play a part in achieving that aim. Moreover, 32% of investors (30% in SA) believe this so strongly that they are happy for their money to be used to reduce carbon emissions, regardless of return.
Hendrik du Toit, Founder and CEO, Ninety One: “We believe in sustainability with substance. However, there is an incontrovertible and sobering fact about the drive to net zero – any effort that does not work for the world’s 7.9 billion people, will fail everywhere. To really save the planet, we must help emerging markets go green. That means robust carbon markets, debt-for-climate deals, and financing options to speed up the transition. As a company with its roots firmly in South Africa, we understand this need perhaps better than most. Emerging economies, after all, are not responsible for the bulk of emissions to date.”
Deirdre Cooper, Co-Portfolio Manager, Global Environment Fund, Ninety One: “The climate crisis presents both tremendous opportunities and risks to investors. This survey makes clear that investors across the globe are looking to allocate capital to funds that invest in companies and countries that are working towards a sustainable future. The investment management industry has an integral role to play in tackling the climate crisis in the real economy, and this cannot be met by providing investment capabilities to investors which tilt towards asset-light sectors, moving capital out of emerging regions, or selling assets to less responsible owners and outsourcing. It is our responsibility to provide end investors with solutions which can counter the climate crisis.”