Two new reports show institutional investors are increasingly embedding climate risk into their decision-making, but also need greater support from policymakers to decarbonise their portfolios.
At COP30 next week, countries are expected to deliver their next round of five-year climate plans, outlining how they intend to cut emissions through 2035. Investors say the credibility and ambition of these plans will be crucial to providing the policy certainty needed to accelerate capital flows into low-carbon and climate-resilient sectors.
The ’Global State of Investor Climate Action’ report, which analysed data from more than 220 asset owners and managers worldwide, found that 75% assess the financial risks and opportunities that climate change poses to their portfolios.
Nature and the just transition are also gaining traction, with 60% of investors incorporating nature-related disclosures into their transition plans. While 70% have invested in climate solutions, fewer than one in three have committed to scaling those investments.
Rebecca Mikula-Wright, CEO of the Asia Investor Group on Climate Change, said COP30 negotiators have “a unique and critical opportunity” to send a clear market signal on fossil-fuel phase-down and adaptation finance. “Investors are acting on climate risks because they’re real and they’re already material to financial returns,” she said.
Nearly three-quarters of investors are engaging portfolio companies on climate issues, with 43% also lobbying governments for stronger policy frameworks. However, the report warned that regional disparities in action and transparency risk undermining global alignment.
A separate report from the Net Zero Asset Owner Alliance (NZAOA), ’Addressing Climate Impacts’, emphasises why managing climate risk must remain central to asset owner decision-making.
It notes that climate change poses “system-level risks” that cannot be diversified away and urges asset owners to integrate climate capabilities, align mandates with asset managers, and engage policymakers to deliver consistent net zero pathways. The report also points out that governments’ policy uncertainty remains a key barrier to capital allocation.
Asset managers failing to incorporate climate considerations “risk seeing their mandates in jeopardy”, the paper added.
