ESG Club interview – The Institutional Investors Group on Climate Change INTERVIEW – MAHESH ROY


“Big change, particularly at big organisations, takes time.”


The head of the investor practices team at the Institutional Investors Group on Climate Change (IIGCC) talks to Andrew Holt about addressing the challenge of climate change, fixed income, framework fatigue, the rise of greenhushing and his concerns for the future.


How are you trying to make a difference in the fight against climate change? IIGCC is one of the world’s largest global investor


bodies focused on climate


change. It operates through three teams. There is the policy team, which was formed 20 years ago to work with institutional investors on climate change. Then there is the corporate team, which has been help- ing investors engage with corporates since 2015, including via Climate Action 100+. Finally, I lead the investor practices team to help institutional investors incorporate climate change into their investment strategies. This team was introduced in 2019 after what is now known as the Paris Aligned Asset Owners was formed. The initiative led to the development of the Net Zero Investment Framework, which marked a step change in how investors address net zero.


I started working in this space in 2020. During this period, we have seen rapid growth in companies and investors pledg- ing their support to net zero as well as a greater scaling up on the issue.


The investors practice was only created in 2019. That seems a little late.


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In terms of where investors were, it was the time when the [climate change] issue started to evolve. IIGCC had already been addressing it on a policy and engagement level for many years. From the perspective of incorporating cli- mate change into investment strategy at scale, it is relatively new. All the investor frameworks and alliances started around this time. The Net Zero Asset Owner Alli- ance, for example, was created in 2020 along with the Net Zero Asset Managers and Paris Aligned Asset Owners initiatives. We can see, therefore, that a lot of pro- gress has been made in three years. While some say we need to go further and harder, you have to remember the size of change we’re talking about. In short: big change, particularly at big organisations, takes time.


What is the most challenging part of your role?


Prioritising what is important for our more than 400 members. They are main- ly pension funds and asset managers spread across 27 countries, with around £56trn in assets under management.


We have so much to do and will focus on the work that will have the most impact. But it is a privilege to be entrusted to do this work.


How, in your view, are institutional inves- tors approaching the climate change chal- lenge? What are they good at and what needs work?


They approach the challenge, as you would expect investors to do, with rigor- ous analysis. They try to use the best avail- able data.


Institutional investors have come a long way in a short period of time in net-zero investing. They most definitely take the challenge seriously. On where there is more work needed: they haven’t been so great at integrating physical climate risk into their invest- ment decisions. But they understand there is work to do here and the need for marrying long and short-term risk.


Is there a difference in approach between how asset owners and asset managers are dealing with climate change?


Asset owners have a long-term view and have to make the necessary changes in


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