Fund managers are in the unhappy position of being able to see the oncoming train but unable to move because their hands are tied. Even though they think climate change is a source of investment risk, their short-sighted clients are not letting them do anything about it.
According to research by FairPensions, nearly 90 per cent of fund managers think climate change is an investment issue, but feel they can’t do anything because of short-term analysis and lack of demand from pension funds.
Lack of demand (cited as the main obstacle by 56 per cent) is pretty unconvincing as an excuse for a laissez-faire policy – surely if faced with a genuine investment risk, they have a fiduciary duty to manage that risk, even if the clients have not yet noticed it?
Others blame the low price of carbon and the “relatively short term horizons of mainstream investment analysis” – although one might think again that if the fund managers see it as a genuine risk, they might do some of their own, less short term, research and communicate its importance to the clients.