Pension plans differ in how much they have incorporated climate investing into their passive portfolios, but the trajectory is clear: 65% intend to increase their climate-linked passive allocations over the next three years.These are the results of a DWS-sponsored survey by consultants CREATE-Research. The study covered over 131 pension plans in 20 jurisdictions with a combined AUM of around EUR 2.25 trillion.
The study shows climate-linked investment has become embedded in passive asset allocation: 26% of plans said they commit over 15% of their passive funds to the segment. However, just over half (56%) still have no allocation at all as part of their passive investments, and 60% say they are constrained by data and definitional problems.
A full 70% of plans examine capacity and track record to fulfil a ‘green’ agenda when choosing an asset manager for climate-related investments.
“This survey shows how sustainability is moving up the agenda for pension funds globally, and how it is being worked into broader moves to embrace passive investment solutions,” said Simon Klein, Head of Passive Distribution, Europe and Asia-Pacific, at DWS.
Climate-linked passives are taking their place in a growing passive thematic investment field. The survey also found that:
- 57% expect overall ESG allocations to grow more than 5% per annum over the next 3 years.
- 70% treat traditional cap-weighted index funds as their favourite passive vehicle of choice, and 89% treat equities as their favourite underlying asset class.
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DWS Group (DWS) is one of the world's leading asset managers with EUR 700 bn of assets under management (as of 31 March 2020). Building on more than 60 years of experience and a reputation for excellence in Germany and across Europe, DWS has come to be recognized by clients globally as a trusted source for integrated investment solutions, stability and innovation across a full spectrum of investment disciplines.
We offer individuals and institutions access to our strong investment capabilities across all major asset classes and solutions aligned to growth trends. Our diverse expertise in Active, Passive and Alternatives asset management – as well as our deep environmental, social and governance focus – complement each other when creating targeted solutions for our clients. Our expertise and on-the-groundknowledge of our economists, research analysts and investment professionals are brought together in one consistent global CIO View, which guides our investment approach strategically.
DWS wants to innovate and shape the future of investing: with approximately 3,500 employees in offices all over the world, we are local while being one global team. We are investors – entrusted to build the best foundation for our clients’ future.
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