Singapore investors behind regional peers on climate governance and disclosures: investor group
Asia Investor Group on Climate Change notes that the real economy still has a long way to go until investors align their portfolios with net-zero trajectories
[SINGAPORE] Investors in Singapore are behind their regional peers in several climate-related metrics, particularly on matters relating to climate governance and disclosures, indicated a recent review by the Asia Investor Group on Climate Change.
The review, which polled 230 major Asian investors, found that Singapore investors were lagging on the following metrics:
- Linking board remuneration to climate performance: Singapore scored an average of 28 per cent compared to an average of 35 per cent across Asia.
- Disclosing climate transition plans: Singapore had an average of 28 per cent compared to an average of 35 per cent in the region.
- Having biodiversity or nature disclosures or strategy: Singapore investors managed 17 per cent, significantly lower than an Asia-wide average of 33 per cent.
- Disclosing physicals risks or adaptation actions: investors here achieved 30 per cent, as opposed to 43 per cent across Asia.
- Advocating for climate policy and regulation: Singapore investors registered 22 per cent, slightly lower than 25 per cent in Asia.
The review noted that for a sophisticated financial sector in a developed economy like Singapore, investors headquartered here can do better in other metrics where they have scored similarly with the regional average.
One of these metrics is climate solutions investments, where Singapore investors scored the same as their regional peers, at 34 per cent.
The other is setting asset-level targets that align with global climate goals. Singapore achieved an average of 28 per cent, slightly better than the regional average of 25 per cent.
However, the report noted some areas where Singapore-based investors outperformed their peers on three metrics.
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These are:
- Recognition of climate risks and opportunities: this is becoming a mainstream practice in Singapore, with 89 per cent of investors having done so compared with a regional average of 75 per cent.
- Conducting advanced climate scenario analysis: Singapore-based investors scored 72 per cent, much higher than the average score of 44 per cent across Asia.
- Setting policies on fossil fuels or other high-emitting sectors: 61 per cent of investors here have policies which indirectly or directly support the transition to renewable energy and the electrification of industries, compared to an Asia-wide average of 43 per cent.
The data on Singapore investors was extracted from an assessment across Asia of how investors have progressed in integrating climate-related considerations in their investment processes.
Out of the 230 investors reviewed – comprising 113 asset owners and 117 asset managers – the median assets under management was approximately US$100 billion.
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They had reviewed these investors on five focus areas: climate governance, climate investment, climate corporate engagement, climate advocacy policy as well as climate disclosures.
The review found that across Asia, institutional investors have been making progress, with more advanced and detailed climate implementation across portfolios.
“However, the real economy still has a long way to go until investors align their portfolios with net-zero trajectories. A large portion of investors are yet to show enough progress across each of the five investor climate action focus areas above...
“Still, enhanced focus on these areas is becoming evident, as investors across the region strive to manage climate risks and opportunities,” said the review.
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