Insights | Article | The gap between commitment and reality on climate change

The gap between commitment and reality on climate change

11 August 2022

Research by MarketMeter finds that climate risk management is close to the bottom of investment priorities in a sample of 115 institutional investors. This remains relatively unchanged over the past year, despite increased rhetoric by major firms that they are engaging with the opportunities and risks associated with the climate crisis. So is this just corporate greenwashing, or are there deeper issues at play?


To explore this, we asked institutional investors about their attitudes and beliefs towards climate risk. They told us:

The markets are already responding at the right pace

“it’s a slow moving beast and careful analysis is needed before making decisions so the current pace seems adequate”

Yet their attitude toward climate risk has changed in the past 12 months

4% of institutional investors said their attitude towards climate risk has changed in the past 12 months. A key focus is the impact the Russia/Ukraine war might have on climate change and energy security, which may accelerate investment in renewable energy. In addition, 59% of investors expect a company’s value to be enhanced if it has strong climate credentials.

“Climate risk has taken a slight backseat to the broader energy crisis underway at the moment… this is likely to swing back in the not too distant future.”

“Climate risk has become mainstream and important to address substantively rather than just window dressing.”

Whatever the reason for the disconnect, substantive action cannot be substituted with greenwashing. The Australian Securities and Investments Commission (ASIC) has recently announced it will be scrutinising investment products and their associated ESG credentials with the aim of preventing greenwashing and misleading claims of sustainable investments by superannuation funds and investment managers.

With regulation gaining pace both at home and abroad, financial institutions need to ensure they invest in the resources required to properly integrate climate change risk management into their investment frameworks. Failure to do so could see them funding the gap between commitments and reality.

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