Europe’s pension schemes are prioritising climate change above other responsible investment topics, according to The Cerulli Edge – Global Edition.

Almost 70 per cent of respondents to a survey conducted by Cerulli Associates, already invest in renewable energy and around 59 per cent invest in energy-efficient assets.

Cerulli Associates director of European institutional research, Justina Deveikyte, said: “Climate-related themes will remain the industry’s focal point in terms of responsible investing for at least the next 12 months, but we expect that some pension funds will start putting more emphasis on themes such as affordable housing, biodiversity, and sustainable forestry.”

Cerulli’s research across seven European countries shows that an increasing number of pension funds in Europe are making formal commitments to net zero: roughly 40 per cent of the pension funds have already done so and 20 per cent plan to do so in the next 24 months.

By country, however, commitment varies. For example, 23 per cent of Italian respondents and 30 per cent of UK respondents have committed to reaching net zero, whereas 50 per cent of Dutch respondents have done so. In addition, more than half of the Dutch pension funds make investments that support the transition to a carbon-neutral economy.

Some 85 per cent of the Dutch pension funds require asset managers to provide the carbon footprints of their portfolios. The proportion is lower in other countries in the region—around 50 per cent in Italy and the UK, for example. However, it will soon be a standard request across Europe.

Information on portfolios’ alignment to a two-degree scenario is the data point least demanded by the pension funds Cerulli surveyed. France is an exception, where roughly 40 per cent of respondents require this information.

“Pension funds expect their asset managers to be serious about environmental, social, and governance (ESG). To illustrate its commitment, a manager could join industry schemes such as the Net Zero Asset Managers initiative or commit to report against the Task Force on Climate-Related Financial Disclosures' guidelines,” Deveikyte said.

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