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Dec 09, 2021

More investors view divestment favorably post-COP26, survey finds

Engagement still top preference but support for divestment sees 6 percentage-point increase

Thirty-six percent of investors say they support divestment as a tool against climate change, up from 30 percent before COP26. That’s according to a survey of more than 5,000 investors across the US, UK, Italy, Germany and South Africa by investment manager Ninety One in an effort to determine attitudes toward ESG issues and whether investors are willing to modify their approaches following the climate summit.

Although more investors (45 percent) still say that working with high-emitting companies for a green transition remains their preference, this is a marked drop from the 55 percent that said they preferred investment managers to use their influence to support a net-zero transition over divestment in a similar poll ahead of the climate summit in Glasgow, Scotland last month.

Hendrik du Toit, founder and CEO of Ninety One, is a vocal critic of divestment, instead arguing that ‘responsible stewardship’ and what he describes as an ‘inclusive’ approach to fighting climate change are essential.

‘To divest is irresponsible and simply demonstrates a lack of understanding, awareness or transparency regarding the climate crisis,’ he says in a statement accompanying the findings. ‘We must focus on long-term transition plans consistent with net-zero by 2050 for companies and countries – not near-term reductions.’

Despite 71 percent of investors saying they felt richer countries should be helping poorer countries to transition to net-zero, Ninety One’s research also points to a lack of confidence in the outcomes of COP26: 57 percent of respondents do not believe the agreements made at the summit will lead to global climate alignment on tackling climate change.

More than two thirds (69 percent) add that a lack of high-profile leadership from China and Russia has made the COP26 goals even more difficult to achieve.

The survey does have some positives, though. It finds that ESG considerations are already part of the daily decision-making process at most investors, with 57 percent saying they have investments with a focus on net-zero or other environmental and societal benefits.

As well as finding that ESG considerations are already integrated into normal decision-making for many investors, Ninety One says these investments also have more longevity, with more than two thirds (67 percent) saying they are invested for five years or more across investments featuring a net-zero, E or S focus.

‘These investors are committed to long-term environmental and societal benefits, or performance with purpose, with 70 percent agreeing that they will hold these investments for longer than those without,’ the firm notes.

It adds that investors expect the shift to a green economy to create appealing investments as well as helping fight climate change. ‘Forty percent say they are happy for their money to influence decarbonization while also expecting a competitive financial return,’ Ninety One says.