Asset Owners Urge High-Carbon Divestment, Worry About Returns - Study

Editorial Staff

10 December 2021

The majority of asset owners in Asia want external asset managers (EAMs) to divest from high-carbon business sectors, but as many as 41 per cent think that pulling out of these industries will cut returns, a study by in Basel recently warned that the sector is in “bubble” territory – unusually blunt language for such an institution. Separately, the trend towards ESG investing has been accompanied by worries about making investments look more environmentally friendly than they really are.

The Cerulli report noted that it might not be easy to decarbonise investment portfolios, as hoped. For instance, complexities in assessing data and risks across different asset classes, and lack of standardised data sets are among the top challenges in evaluating companies for climate risks.

"Addressing climate risks is complex - the most sophisticated asset owners will rely on managers to learn about technical details of carbon data measurements, types of assets to be assessed, and types of emissions to be included, among others," Leena Dagade, associate director, said.

"While some asset owners have committed to net-zero emission targets, given the novelty of the topic and technical details of measuring climate risk, various segments of the industry will need to join forces to share knowledge and come up with collective actions in order to reach their climate goals," Dagade added.