Institutional Asset Manager Newsletter 22.09.23

Green turnaround

UK Prime Minister Rishi Sunak chose Climate Week to announce what former US Vice-President Al Gore has described as "a shocking and disappointing" watering down of the nation’s net zero ambitions.
A ban on new fossil-fuel powered car sales has shifted from 2030 to 2035, while homeowners and landlords will no longer be required to meet energy efficiency targets in insulating homes.
These policies were central to reducing the UK’s harmful greenhouse gas emissions and are, according to an article in The Guardian from Green MP Caroline Lucas, "toxic" enough to unite energy companies and the automotive industry – which have spent years innovating to meet the 2030 target – with environmentalists.
The news will also be a blow to Zoe Balmforth, ecologist and Founder of Pivotal a biodiversity data and analytics company, who tells us from Climate Week, that policymakers are already moving too slowly on environmental issues.
Balmforth was referring specifically to efforts to curb biodiversity decline, and notes that while the latest recommendations from the Taskforce for Nature-related Financial Disclosures (TNFD) published this week are a positive step in helping investors to understand companies’ impact on biodiversity, the framework lacks the force of legislation.
"The risk is that companies just decide this is too difficult, so they choose not to report. You have to remember that TNFD is voluntary and without the imperative to disclose, maybe companies will choose not to," Balmforth says.
In the absence of any serious clout from government, Balmforth says it will fall to investors to provide a private capital incentive for companies to make a positive change.
Other news this week focuses on the crypto currency world. First, we hear from Nickel Digital Asset Management that institutional investors increasingly recognise the importance of digital assets in diversified investment portfolios.
More than nine out of 10 (92 per cent) believe digital assets have "an important role to play in portfolios" which sounds convincing, but the reality is that the sector still suffers from a chicken and egg situation. While investors may see the relevance of crypto, 96 per cent won’t invest in a fund until another major financial institution has made a commitment.
However, a reassuring sign for those eyeing digital assets, is the increase in fund launches that Nickel says indicates a recovery in the market. Which brings us rather neatly to news that Nomura’s digital assets subsidiary, Laser Digital, has announced the launch of its Bitcoin Adoption Fund.
Fiona King, Head of Distribution, Laser Digital Asset Management says the fund "allows institutional investors a secure path into digital asset investment backed by established finance, with the highest levels of risk management and compliance."
Presumably Laser Digital will hope this overcomes some of the barriers to investment identified by Nickel’s survey which includes 45 per cent of investors who have serious concerns about the sector’s security.
Nominate now in the final week of the Institutional Asset Manager Service Provider Awards, 2023. The nominations will close 29th September, and the voting will re-open on the 2nd October, and participants will have to both nominate and vote to give their chosen companies a chance.
To nominate please click here.
Gill Wadsworth, Editor
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