Climate considerations becoming 'more material' for asset owners

Written by Paige Perrin

13/03/2025

Climate considerations are becoming more material for asset owners, with a growing emphasis on climate-related risks and accountability, according to Morningstar Sustainalytics head of sustainable investing research, Hortense Bioy.

Speaking at the Pensions and Lifetime Savings Association’s (PLSA) Investment Conference 2025, Bioy acknowledged that climate change is difficult to predict even for scientists but emphasised the importance of asset managers starting somewhere.

“It starts with the target. We are not sure where we are going but we need to start somewhere. We need to have commitments,” she stated.

“Companies need to know what risk they are facing. It is about monitoring those companies and holding them to account.”

Bioy also argued that the transition to net-zero is the most material environment issue to asset owner decisions, as the firm’s research suggested that 55% of asset owners identified this as their top concern in 2024, up from 52% in 2023.

“Asset owners are very aware of the challenges they face, and they have many concerns,” she said.

She explained that tackling this kind of crisis is not easy, highlighting concerns about fiduciary duties, the ability to influence outcomes, and the roles of investors versus the role of the government.

“It is very important to understand the concerns and challenges,” she said.

During the session, attendees were polled on whether they thought climate considerations had become more material in the past two years.

The majority (75%) of attendees said they had become more material, 24% said there had been no change and just 1% believed they had become less material.

The same audience of pension professionals was asked what they believe the most significant challenge is in integrating climate action into investment portfolios, 54% of respondents said data availability and quality.

Other challenges included measuring financial impact (31%), clarity over government policy (12%), regulatory compliance (2%), and other concerns (2%).

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