Investors around the world are planning to divest 15.6 percent of their portfolios from fossil fuels over the next decade, or $920 billion in assets, as part of a global transition into renewables, according to a new report by specialist asset manager Octopus Group.
The report, titled The Great Transition: Opening the Renewables Floodgate, surveyed a variety of global investors representing $5.9 trillion in assets under management on their stance on climate change. Investors included pension funds, fund of funds, insurance companies, private banks and sovereign wealth funds.
According to the report, renewable energy infrastructure is expected to benefit from the asset shift, with investors planning to ramp up allocations to renewable energy infrastructure to 5.2 percent over the next year and more than double it to 10.9 percent by 2029, representing an investment of $643 billion into renewables over the next 10 years.
Financial institutions in the United Kingdom reported being optimistic about their role in slowing global warming, with 71 percent saying they believe investment strategies will have a material impact on climate change outcomes.
While a solid majority of institutions (69 percent) said they believe renewables can play a significant role in defeating climate change, some remained resistant to altering their investment strategies. Twenty-three percent of respondents have not made any changes to their portfolio and 16 percent said they have no allocation to renewable sectors.
Some of the barriers facing institutions to renewable adoption were energy price uncertainties, renewable energy investment skills within the organization, and liquidity issues.
Read the full report at this link: https://bit.ly/30g2vn7
Kali Persall is a reporter at Institutional Real Estate, Inc. and editor of iREOC Connect.