Contrary to popular belief, large US investment firms, insurers and pension systems either have plans in place to assess and disclose climate change risks or are implementing partial programs to do so, a new report concluded.
The investor advocacy group Ceres researched the climate commitments and follow-up actions of 48 investors with a combined $60 trillion in assets under management to assess if they are walking the talk of their climate commitments. The study included heavyweights such as the California and New York public retirement systems, as well as BlackRock Inc., JPMorgan Chase & Co., Vanguard Group Inc. and other leading asset managers and was based on the organizations' public documents and reports.
"The surprising thing to me was the high number of investors that had made net-zero commitments, 77%, and of those, 90% have plans in place to show implementation," the Rev. Kirsten Spalding, vice president of Ceres Investor Network, said in an interview. "They put this in their financial disclosures, their [Task Force on Climate-related Financial Disclosures] reports, and almost all said it's governed by the board. When we start to find all these elements in their plans we can say, yes, they're serious about it, they can be held accountable."
The study found investors are making progress on where they place money, how they engage with companies in which they invest, and their disclosures of material climate risks and opportunities to investors, according to action plans developed for the investment community.
The Ceres study departs from the drumbeat of critical reports by groups that track fossil fuel investments or client engagement on climate-related topics by the financial industry. It also suggests that the politicized pressure on firms to leave financial networks such as Climate Action 100+ may not have changed how companies look at their fiduciary responsibilities regarding climate change, Spalding said.
Investor engagement is being driven by disclosure rules going into effect in Europe and the UK, the report said. At the same time, US corporations are monitoring the court battles over the SEC's climate risk disclosure rule and similar litigation against new disclosure laws in California.
Ceres reported that 22 of the 48 investors covered by its study submitted comments to the SEC in support of the agency's rule. At the same time, the group noted that only half of the investors mention specific plans or strategies for investing in climate solutions, and nearly half do not report lobbying lawmakers to address climate change.
"Since policy shifts will determine real economy progress on climate change, investors should consider including plans to engage with policymakers both at the national and international levels to combat the climate crisis," the report said.
At the same time, some investors are taking steps to channel more money into projects that contribute to carbon reductions. In November 2023, for example, the California Public Employees' Retirement System announced it would commit $100 billion to sustainable investing that it said will be designed to generate "excess returns and boost earnings" for the benefit of retirees in the state.
Several private-sector asset managers Ceres assessed in the report could not immediately be reached for comment or declined to comment.