AIGCC finds that most Asian investors do not have deforestation policies in place

The Asia Investor Group on Climate Change (AIGCC) has released a report highlighting the significant gap in investment strategies on deforestation among Asian investors. Despite acknowledging climate change as a material risk, nearly 90% of the region’s investors lack a deforestation policy, with only 4% conducting detailed assessments across their portfolios.

The study surveyed over 200 regional asset owners and managers representing over US$76 trillion in assets under management. It revealed that while 19% of asset managers consider deforestation in their investment decisions, only 3% of asset owners have done the same. This disparity extends to other sustainability practices, such as the phase-out of fossil fuels and scaling up investments in climate solutions.

With an anticipated US$71 trillion needed for Asia to achieve net-zero by 2050, the majority of investors are not positioned to mobilize this required financing. Only 12% have committed to increasing investments in climate solutions, including clean energy innovations. Additionally, most investors in the region have yet to introduce formal policies to phase out fossil fuels or high-emitting assets from their portfolios.

The report also highlighted investors’ climate policy wishlist, with many calling for improved carbon pricing, greater funding for new climate technologies, and mandatory climate risk reporting. However, domestic investors in the region appear hesitant to urge government officials to introduce more ambitious climate policies.

The report’s findings underscore the need for Asian investors to align their investment strategies with climate goals and address gaps in deforestation policies and other sustainability practices to support the transition to a low-carbon economy.