Big investors are shifting towards low-carbon industries

A survey from clean energy investors Octopus finds that nearly half of investors have reconsidered their portfolios in the wake of increased climate change activism in the past year. Demand for these assets had risen by more than one third since October last year, when Octopus first surveyed investors.

The global survey of institutions representing $5.9tr in assets under management asked 100 pension funds, insurance companies, private banks, sovereign wealth funds, endowments, and foundations across the UK, EMEA, Asia, and the US about how quickly they were divesting from fossil fuels and investing in renewables.

The survey shows that investors plan to divest 16 per cent of their portfolios from fossil fuels over the next decade, representing assets worth $920bn. They will also increase investments in renewable energy infrastructure to five per cent over the next 12 months, which will more than double to 11 per cent by 2029, or $643bn, the survey found.

Respondents expressed optimism about their ability to slow global warming, with 71 per cent stating that they believe investment strategies could make a material difference.

They identified a number of barriers to greater investment in renewable energy infrastructure though. Almost half cited energy price uncertainties as a key blocker, followed by a lack of renewable energy investment skills within their own organisation and liquidity issues.

Investors see the need to shift their portfolios away from high carbon industries. They both spot the opportunity heralded by clean energy, and the threat of stranded assets could pose to their activities. But protestors are getting impatient, so finance will become a focus for climate activists in the months to come.

Wise investors should jump before they are pushed.

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