Asset managers ‘hungry’ to contribute to tackling climate change

The asset management industry is hungry to play its part in resolving the existential risk of climate change, but it cannot solve this problem alone, Janus Henderson underlined at the COP26 Summit in Glasgow this week.

Hosting a panel at the summit, Janus Henderson said facilitating further decarbonisation will require a combined effort by governments, corporates, capital markets, and asset managers.

Among the experts at the decarbonisation panel was Mark Cutifani, chief executive at Anglo American, who reiterated the collective role needed to address climate change.

“We all understand that we have a collective role to play in addressing climate change and now the focus is on how we must work in partnership with multiple stakeholders – such as governments, regulators, local communities – to define the actions we need to take,” Mr Cutifani said.

Reflecting on emerging markets in particular, Janus Henderson announced it will investigate decarbonisation and publish its findings in a new series of reports, exploring how it could unearth opportunities for emerging markets.

“Our reports will set out the role that needs to be played by governments, corporates, capital markets, and asset managers to facilitate further decarbonisation,” Janus Henderson’s head of ESG investments Paul LaCoursiere, who moderated the panel, said.

Joining him, Krista Tukiainen, head of research at Climate Bonds Initiative, opined that a global baseline taxonomy may be “the single most crucial element” in enabling financial institutions to make a tangible impact in addressing climate change.

“The fixed income space already has relatively good definitions and governance mechanisms to ensure projects can be financed, but market and policy-based mechanisms can work better in tandem to deliver impact in emerging markets,” Ms Tukiainen said.

Moreover, Dr Nina Seega, research director at the Cambridge Institute of Sustainable Leadership, stressed the need for financial markets participants and climate scientists to recognise their differing view on the carbon transition.

“As an economic community, we tend to think the future will be linear and will broadly follow the pattern of the past,” said Dr Seega.

“Climate scientists think in terms of disruptive transition. While financial analysts may worry about the effect that the slow but steady carbon transition will have on the net present value of legacy assets, a climate scientist would ask: what happens to the value of an asset under a quick and potentially painful disruptive transition from climate change?”

Janus Henderson is planning to publish the first of its reports in the first quarter of next year.

A total of 220 asset managers with US$57.4 trillion in assets under management have now signed the Net Zero Asset Managers initiative to achieve net-zero emissions by 2050 or earlier.

Ahead of COP26, 733 institutional investors managing US$52 trillion in assets also called for more action from governments on climate change.

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.