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Asia pension funds lag insurers on net zero commitment, Aviva study finds

According to the Aviva Investors’ Real Assets Study 2021, 52% of insurers and 50% of pension funds globally have committed to achieving net zero in their portfolios by 2050
By Goh Thean Eu   
November 30, 2021

More insurers than pension funds in Asia are committed to achieve net-zero carbon emissions in real assets, with pension funds also lagging behind global counterparts, according to a new study by Aviva Investors.

Globally, it says 52% of insurers and 50% of pension funds have committed to achieving net zero in their portfolios by 2050, an overall increase of 12 percentage points from a year ago. In Asia, the figures are 51% for insurers and 41% for pension funds, with the latter lagging both the US and Europe.

The study was conducted in August with 1,119 investment decision-makers: 584 for insurance funds and 535 for pension funds. Of the total, 565 are in Europe, 336 in North America and 218 in Asia.

“Global institutional investors have significantly raised their ambitions to implement net-zero commitments across portfolios over the last 12 months, whilst being increasingly aware of the challenges in meeting these targets,” according to the study published on November 29.

Among insurers, European firms are slightly ahead at 53% compared to North America where the share is 51%, the same as Asia. But US pension funds are well ahead with 60% versus 47% in Europe and 41% in Asia.

Physical climate risk was cited as the most important key performance indicator by 35% and 37% of insurers and pension funds, respectively, followed by carbon footprint, with the shares at 32% and 36%.

Respondents were also “vocal” about the challenges faced in reaching their emissions goals, with 87% of insurers and 85% of pension funds rating environmental pressures of investing into new infrastructure as either “very or slightly discouraging”, the study says.

It also found continued increase in focus on the social responsibility or ‘S’ factor of environmental, social and governance in real assets investing, with employment and skills rated the most important followed by health and wellbeing.