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The UK: Green Investments Not Attractive

Saturday, 17 October 2009

A survey in the UK recently revealed that environmentally sustainable investment is suffering because clients are not showing enough interest in it. The survey, compiled by charity FairPensions, found that 56% of 39 global asset managers believed investors favoured short-term investment returns over a more long-term, environmentally sustainable, outlook. Survey respondents believed this to be true even of those with long term investment plans, such as pension schemes. According to reports, JP Morgan and State Street Global Advisors were among those claiming lack of client demand for green investments. US head of responsible investment at consultant Mercer, Craig Metrick, was quoted as saying, “The financial crisis has not helped as investors have been preoccupied with more immediate problems... However, there is growing interest in this type of investing; clients may not be allocating to specifically targeted funds, but many are looking at implementing measures to their existing portfolios.” According to reports, Aviva Investors’ response to the FairPensions survey said clients were keen to push the climate change debate forward and any suggested lack of demand was less of a barrier than current regulatory requirements on companies to disclose their environmental risk. Aviva Investors recently moved £660m of its clients’ global equity assets to a sustainably invested fund. The survey also found that despite 86% of fund managers advocating that companies report on their greenhouse gas emissions, 15% did not report on the issues themselves, with a further 44% only responding to direct investor demands. The survey stated, “We also suggest that the mandatory reporting requirements which fund managers are keen to apply to companies should also apply to the emissions exposure of their own portfolios, due to the clear public interest in knowing whether the financial services sector is behaving in a manner both financially and environmentally sustainable.”