Climate change has 'no influence' on fund managers

London, 7 June: The climate may be changing, but most institutional investors are not changing their investment strategies, according to a survey of UK asset managers published this week.

A lack of interest from clients, no clear regulatory framework and the long-term nature of climate change effects were the main reasons cited by the asset managers for their dismissal of the issue. Fiduciary duties dominate investment strategies and, unless there is a specific and immediate event, climate change is not a central concern to asset managers, said the London-based HeadLand Consultancy in its report.

One fund manager quoted in the report said: "We are not factoring climate change into mainstream investment risk because it is too long-term." Respondents defined long-term as three years.

The researchers sampled the opinion of 19 asset management houses, representing £3 trillion ($6 billion) of funds under management, in April 2007.

According to the survey, there was little evidence of investment firms incorporating climate change in top-down investment strategies. Only specialist 'green' funds and investment houses that have a strong socially responsible investment policy are factoring in climate change issues.

Most managers had recognised the risk that climate change poses to sectors such as insurance, power generation and transport – where the impacts are relatively clear and direct. However, there has been little in-house analysis of the potential 'winners' or 'losers' associated with this issue, the study said.

Many respondents commented that pension fund clients rarely asked for climate change to be considered. Another asset manager said: "If clients don't ask for it, why should investors and companies put it as a high priority?"

Other asset managers acknowledged that some re-rating of companies will inevitably happen once disclosure and regulation requirements become more manifest.

Howard Lee, a senior partner at The HeadLand Consultancy, said: "Without clear regulatory guidance providing a measurable framework, it is unsurprising that the asset managers participating in this study have yet to include its potential significance into mainstream investment strategy."