ShareAction Report Highlights Progress and Gaps in Climate Investment Policies

ShareAction —  an NGO monitoring and engaging with the finance industry on climate — surveyed asset managers who participated in their 2023 ranking to see if they had updated their policies in the last 18 months. Their previous findings revealed a significant gap in the policies asset managers had in place to address their environmental and social impacts, and this new survey seeks to gauge the progress made over the past year,

Below is a preview of ShareAction’s preliminary findings. For more details, you can read the full post on the ShareAction website here.

The data presented comes directly from ShareAction and is self-reported by the asset managers, indicating whether they have updated their policies and not the specifics of those policies. Out of the 77 asset managers in the 2023 benchmark, 56% responded to the survey. The majority were from European asset managers, who were also overrepresented among those who performed well in the 2023 benchmark; nearly three-quarters achieved a grade of C or above.

Updates in Policies

According to ShareAction, a significant number of asset managers reported policy updates. Climate investment policies saw the most attention, with 79% and 77% of respondents, respectively, indicating updates in these areas. On the biodiversity front, the focus was largely on how asset managers engage with companies to drive change. About 60% reported updates in this engagement process.

Social and Climate Policies

Updates to social and climate investment policies were less common, with only 65% of respondents for the former and 60% of respondents for the latter reporting changes. The most frequently mentioned update was the implementation of compulsory training for responsible investment, reported by 42% of those surveyed. 

Despite this, significant gaps remain. For instance, only two asset managers updated their policies regarding Indigenous Rights and the ‘Free, Prior and Informed Consent’ (FPIC) framework, which is essential for protecting the rights of indigenous peoples and safeguarding biodiversity.

Fossil Fuel Policies Make Limited Progress

ShareAction say there is a concerning lack of progress in updating climate investment policies regarding fossil fuels. 30% of asset managers reported no updates to their fossil fuel investment restrictions since 2022 and have no plans to do so. Among those who did update, only a few tightened existing thresholds to exclude more fossil fuel companies.

Stagnation on Net-Zero Targets and Transition Plans

Setting net-zero targets and publishing transition plans are vital components of an asset manager’s climate strategy. However, most respondents have not strengthened or expanded the scope of their net-zero targets. Only one out of eight asset managers who planned to set interim net-zero targets by 2023 actually did so. Similarly, only 10% of those without a transition plan at the time of the 2023 benchmark have published one since, with the few that have done so being European firms.

Engagement Policies Focus on Escalation

Two-thirds of asset managers updated their engagement policies with invested companies, focusing on escalation processes where serious actions are taken if companies fail to act. Eurizon, for example, added a time-bound element to its escalation policy. However, fewer asset managers updated their expectations for companies during engagements. 

ShareAction concludes that although there have been some developments in policies which relate to governance, biodiversity, and some social issues, the overall momentum on climate investment policies has slowed. ShareAction’s next asset manager benchmark, which is set to be published in 2025, plans to provide an in-depth analysis of these policies and offer clear recommendations for achieving responsible investment.

To read more about what makes an effective climate transition plan, read this.