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Most investors plan to cash in on climate action

HSBC finds that two-thirds of investors plan on climate mitigation, but many are frustrated over "highly inadequate" information from companies.

Institutional investors are gearing up to plow increasing amounts of cash into the low carbon transition, but many still feel hamstrung by companies not being open enough about the climate-related risks their firms face.

According to a new survey conducted by financial market researchers East & Partners on behalf of HSBC, two-thirds of institutional investors plan to increase their level of investment in climate mitigation efforts.

But of the 497 institutional investors surveyed, more than half say they are receiving "highly inadequate" information from companies about their exposure to climate risk, despite months of high-level focus on the issue from financial heavy weights including Bank of England governor Mark Carney, chair of the Financial Stability Board (FSB).

Alongside the risks of poor disclosure  which include the threat of reputational damage and the impact of so-called "stranded assets"  the study also underlined the growing sense of opportunity with which investors regard the low-carbon transition.

The study, first reported by the Financial Times, found demand for green energy peaked in Europe where 97 percent of investors planned to direct more capital into low-carbon energy assets. Similarly, 85 percent of respondents in the Americas and 68 percent in Asia intend to step up green energy investment.

Daniel Klier, head of strategy at HSBC, told the FT the survey is a sign green finance is being "embedded" across the mainstream investment community.

Demand for green energy peaked in Europe where 97 percent of investors planned to direct more capital into low-carbon energy assets.

It follows moves by a number of major investors to focus their investment strategy more explicitly on climate issues.

On Sept. 12, UBS Investment Bank launched a new series of investment products aligned to the 17 U.N. Sustainable Development Goals (SDGs) designed to make it easier for clients to invest in climate mitigation, low-carbon technology and social justice causes. 

"As the world's largest wealth manager and a recognized sustainability leader we are always looking to combine our expertise and range of products and services to support our clients' financial, sustainable and philanthropic goals," Michael Nelskyla, head of investor solutions Americas at UBS Investment Bank, said in a statement. "This new series of products represents an industry first that allows our clients to pursue all three goals through a single investment."

Meanwhile, major asset manager BlackRock explained earlier this year that it will vote against management if its concerns over climate risk consistently are ignored — a move followed by close competitor Vanguard Group, which confirmed earlier this month it would be adopting more "public positions on select governance topics such as climate risk disclosure."

The survey also looked at how companies are navigating the increasingly high-profile world of climate disclosure. Just over half of the 507 companies questioned said they had an environmental strategy in place, but despite heightened investor interest in the issue, only 43 percent disclosed that strategy to investors.

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