Institutional Asset Manager Newsletter 05.12.24

Institutional Asset Manager Service Provider Awards 2024 winners announced

We are very pleased to bring you the winners in this year’s Institutional Asset Manager Service Provider Awards. Many congratulations to all our winners who are, as Beverly Chandler, managing editor of Institutional Asset Manager said in her speech at the awards’ event, ‘the backbone of an increasingly competitive industry’.
While the industry is increasingly competitive, 2024 has been another year of turbulence: wars in the Middle East and Ukraine persist; there have been major changes in government in the developed and developing worlds; and the ever-present impacts of climate change all serve to create a challenging environment for investors.
No wonder then that 75 per cent of investors say they need to build portfolio resilience, and managing risk has become a primary objective.
The findings are from a report by bfinance looking at 300 investors globally worth USD7 trillion in assets who cite geopolitical unrest as their major concern.
But it is not all doom and gloom. Despite worries about the potential threat from artificial intelligence, 40 per cent of investors see emerging technologies as "a strong investment theme".
And investors are also warming to the idea that climate finance should be part of their portfolio. Two-fifths of those surveyed say investing in climate transition is an attractive proposition, especially biodiversity-focused assets where allocations are projected to grow by 200 per cent.
Climate change as an investment opportunity is certainly more palatable than the alarming research from Ortec Finance this week.
The fintech finds that North American pension funds could see returns decimated by 50 per cent if worst case scenario climate change forecasts happen by 2040.
And while the picture is slightly less bleak for Europe, pension funds still stand to lose significant investment returns unless the race to eliminate carbon emissions is accelerated.
These are, to put it mildly, significant losses and as Ortec’s climate risk specialist, Doruk Onal, says they will have "serious implications" not just for scheme members but for the wider global economies.
That pension funds can create a virtuous circle by investing in the climate transition to both protect returns and mitigate risk is clear, and many are doing just that.
But not enough and certainly not quickly enough. A May 2024 survey of 300 of institutional investors carried out by Robeco found that just 37 per cent are investing in strategies targeting companies with credible transition plans.
As Lucian Peppelenbos, climate and biodiversity strategist at Robeco, says: "The transition among corporates and others from brown to green, as they decarbonise, cannot take place without the active involvement of investors, rewarding those making the change and withdrawing support from the unwilling or reluctant."
If investors are worried about the risk of climate change and can see the benefits of investing in companies that contribute to mitigation, then there is an obvious course of action
And if pension funds ae to avoid losses of as much as 50 per cent, they will need to take that path sooner rather than later.

Gill Wadsworth, Editor, Institutional Asset Manager
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