Investors remain interested in green transition despite political pushback

Investors want to be able to invest in companies that are enabling the green transition, despite opposing political rhetoric and performance concerns, according to Quilter.

Its research found that 42 per cent of investors wanted the option to invest in companies supporting the green transition.

Fewer than a quarter (24 per cent) did not want the option to invest in those enabling the green transition, while 34 per cent said they were unsure.

Of those who did want to invest in companies with green credentials, 29 per cent believed at least half of their portfolio should be invested in this way.

More than half (54 per cent) wanted a minimum exposure of 25 per cent.

Meanwhile, 44 per cent of investors wanted their investments to play a role in reaching net-zero carbon emissions.

Of those investors, 41 per cent felt their portfolio should exclude companies that are not meaningfully transitioning to net zero.

However, Quilter noted that responses suggested a need for balance and understanding that, for some companies, there will be a more gradual change.

For investors who wanted to see exclusion, 60 per cent called for investments to avoid high-emitting sectors, such as oil, gas, and aviation.

Coal was the sector people most wanted to be excluded, followed by the worst oil and gas emitters.

Quilter said this highlighted pragmatism from investors who wanted to understand emissions and exclude the worst offenders, while not having a portfolio that had blanket exclusions that could hamper the transition.

Nearly three quarters (74 per cent) of investors were concerned about climate change, with 67 per cent reducing home energy usage and 60 per cent minimising food waste.

“Recent years have brought an increasingly challenging backdrop for the green transition, with a rise in populist rhetoric pushing back against renewable energy and policies,” said Quilter head of responsible investment, Ido Eisenberg.

“Despite this, consumers clearly recognise that climate change is real, happening now, and already influencing their daily lives. They understand that these impacts extend to their portfolios, regardless of who holds political power.

“The recent weeks have clearly demonstrated how reliance on fossil fuels can drive market volatility.

“At the same time, the results show a marked disconnect between the high level of climate concern among investors and the relatively low adoption of investment products that integrate climate considerations or support the transition. This is the gap we want to close.

“People intuitively grasp that their investments can influence climate outcomes, just as climate change can influence their financial outcomes. Yet this understanding is not consistently translating into action.

“As an industry, we aim to bridge this gap through better education and by offering products that meet investors’ climate‑related needs.

“It is crucial, therefore, that investment firms do not shy away from the developments already seen in responsible and sustainable investing over the past decade. Customers want these options when it comes to their portfolios, and these assets will outlast whichever political party is the flavour of the day.”

---