ESG policies around investing are causing unease for some institutions, a survey from Robeco has suggested.
The Robeco Global Climate Survey 2023 highlighted a number of issues in the market that respondents say are causing tension. These include the energy crisis, which – while reinforcing net-zero convictions – has increased short-term exposures; and whether policies to avoid investing in fossil fuels will make it harder to operate in certain jurisdictions or locations.
Robeco said the sentiment from the survey showed there was “continued momentum among investors, but they are facing challenging markets and policies”. It added: “Investors are moving from aspiration to implementation, but they need policymakers to keep course and provide long-term clarity.”
The survey also found Europe was leading the way in net-zero commitments, with almost two-fifths (37%) of investors – nearly double the proportion of other regions. It also said the continent was leading on divestment and on engagement. Some two-thirds (63%) of investors there, Robeco noted, are concerned about legal and/or political pressure if they do not act on ESG.
The survey also found the energy crisis reinforced more than half (54%) of investors in their net-zero conviction, with 43% increasing their engagement with oil and gas companies. The main barriers, however, remained lack of data, concerns on greenwashing and a lack of standards.
Elsewhere, the Financial Times reported that executives from Solvay, Merck and Dow had said Europe’s Net Zero Industry Act would not be competitive with the US’s Inflation Reduction Act. All three heavily criticised the European response, arguing there was an “uncertain investment environment in Europe” that needs to be swiftly fixed.
The FT wrote: “More than $90bn [€83bn] in green investment has poured into the US since last year’s passage of the [Inflation Reduction Act]. The landmark legislation, which seeks to reduce emissions to half their 2005 levels by 2030, provides tax credits for groups that source parts and materials from countries with which the US has a free trade agreement. That excludes the EU and Japan, which lack such deals with the US.”
All this comes a week after Expert Investor Europe reported the US and the EU had reached ‘common ground’ on the Inflation Reduction Act and the European Green Deal.