As stewards of trillions of dollars of capital, asset owners sit at a critical juncture in the transition to a lowcarbon and climate-resilient economy. Their primary fiduciary duty is to maximise the value of their investments and deliver returns for their clients (often working people with pensions) over a long-term time frame.
Their assets under management also put them in a powerful position to influence their ecosystem’s actions in response to climate change, impacting their regulatory environment and the product offering of asset managers. A key task for chief investment officers (CIOs) is to ensure their portfolios can deliver returns in the context of long-term risks, including climate change. The fundamental task of a CIO is to structure a portfolio in line with expected return targets and risk tolerances, which are often set at the board level, in line with pension liabilities and strategic commitments.