Divestment from high-emitting countries and industries has become more popular following last month's COP26 climate summit, a global survey of investors has found.
The poll of 5,000 investors across the UK, US, Italy, Germany, and South Africa found that 36% now support divestment, compared with 30% prior to COP26.
More prefer to follow an inclusive transition approach, using their influence to help developing countries achieve net-zero emissions – instead of simply divesting – although this has fallen from 55% to 45%.
Hendrik du Toit, chief executive of asset management firm Ninety One, which carried out the poll, said that prioritising divestment is “irresponsible”, and demonstrates a lack of understanding, awareness or transparency regarding the climate crisis.
“There is a sobering and incontrovertible fact about the drive to net zero: any effort that does not work for the world’s 7.9 billion people, most of whom live in emerging markets, will fail everywhere.”
He added: “Net zero for some means no net zero at all. We must focus on long-term transition plans consistent with net zero by 2050 for companies and countries, not near-term reductions.”
The survey also found that 71% of investors agree that richer countries should be helping poorer countries to transition to net zero.
However, there is a lack of confidence in the outcomes produced by COP26, with 57% of respondents sceptical that they will lead to global climate alignment on tackling climate change.
A lack of high-profile leadership from China and Russia has made it even more difficult to achieve, according to 69% of investors, with little difference in view across markets.
However, reducing carbon emissions is still seen as compelling investment, with 40% stating that they are happy for their money to influence decarbonisation while also expecting a competitive financial return.
Moreover, the findings show that 78% of investors prefer active managers for investments that are focused on net zero, environmental and societal benefits, up from 71% before COP26.
Overall, 57% of investors polled have investments with a focus on net zero or other environmental and societal benefits, and 67% of these are invested in them for five years or more.
Du Toit concluded: “Although the private sector cannot solely provide the kind of incentives needed, we must drive the early momentum of the intended transition and provide green finance at scale.
“The investment opportunity is in the tens of trillions of dollars. With a fair and inclusive transition, the whole world wins.”
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