The survey asked where the strongest demand for climate-related products lies with investors (Q23). The clear answer was for sustainable equity funds (30%) which was cited by twice as many respondents as the next most popular option – existing strategies that have a greater climate focus via exclusion (14%).
While this shows that investor appetite is still for mainstream products, there is also a demand for funds with a direct impact mandate (12%) as well as more innovative asset classes such as clean energy funds (11%), low carbon funds (11%) and green bonds (10%).
The green bonds market is clearly growing. Dutch asset manager NN Investment Partners has forecast that the green social and sustainability bond market will reach €1.1 trillion worth of issuances this year. The asset manager cited investor urgency to finance the energy transition as sovereigns and corporates look for fossil fuel alternatives and other low-carbon transport opportunities.
There is still a relatively small number of firms (28%) offering or investing in pure climate change funds (Q24), although 22% said they plan to do so, which accounts for a combined 50% of respondents. This means that exactly half of respondents offer no dedicated climate funds, including the 14% that offer exposure to climate factors through existing ESG products rather than on a standalone basis.
Repositioning existing products to align with a stronger climate-focused approach was mentioned by 51% of respondents as a key focus on product design (Q25). And for new products, the direction is very clear – 57% said new products would be aligned to investors’ sustainability preferences.
Specific funds that target climate impacts through low-carbon companies or bond issuers was a priority for 36% of respondents. Clean energy opportunities was a focus for 26% of respondents. These all came ahead of launching green bond funds.
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2: Creating a climate risk framework
3: Importance of investment risk overlooked
4: Internal governance still developing
5: Education and skills are key
6: Data availability challenge misplaced
8: Product development
10: Recommendations and regulation
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