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Who is responsible for securing net zero in the investment industry?

By: Jack Dominy


On Thursday 4th November, one of the top headlines emerging from the COP26 climate summit was that more than 40 countries were committing to shift away from coal, in a bid to build a future centred around clean energy.

Many of the leaders from countries around the globe are urging that there is no more time for the world to ‘sit on its hands’, that to save tomorrow we must act today, and to achieve net zero we need to take action now.

Over the next few years, the world will see whether these promises and commitments made at COP26 will be kept, and whether there will indeed be a positive impact and material difference to our planet.

But in terms of the investment industry, which can without doubt be a great facilitator for purposeful change, who is responsible for helping the world to move towards net zero and keep the target of 1.5 degrees centigrade achievable? In a recent survey conducted by Research in Finance before the beginning of COP26, we asked 400 discretionary fund managers (DFMs), investment advisers (IAs) and paraplanners on that very question.

Respondents were asked what the relevance of the COP26 Goal 1 ‘Secure global net zero by mid-century and keep 1.5 degrees within reach through ambitious 2030 emissions reductions targets’ was to their role, their firm and fund managers.

Around a quarter of DFMs think that this goal is ‘very relevant’ to their role and their firm, with the equivalent proportions among IAs and paraplanners lower for each. 95% of DFMs think that securing global net zero is at least a little relevant to their firm, and intermediaries in general are slightly more likely to believe the goal is relevant to their firm compared to their individual job role.

However, what is crystal clear is that DFMs, IAs and paraplanners all perceive achieving global net zero to be relevant to fund managers. Intermediaries are steadfast in their opinion that fund managers should be crucial in helping to achieve net zero and in keeping the target of 1.5 degrees within reach.

Fund managers have the power to accelerate the move to net zero, and intermediaries believe that that power and force for change needs to be exerted. Perhaps COP26 is the moment that shines the light on how the investment industry and the climate targets set by world leaders can and need to align, as well as how fund managers can influence building towards a better future.

We have more research just around the corner to see how the responsible investing landscape develops. RiF is launching the third annual wave of our UK Responsible Investing Study this November, and we look forward to ascertaining how the market has developed, which terms are most well understood, what challenges are most prominent to intermediaries and what the opportunities are for fund managers.

If you would like to find out more about this study, please contact Toby or Richard.