The CFA Institute Research and Policy Centre has published its recommendations on how investors can drive progress toward net zero, even in an uncertain policy landscape, citing fiduciary duty as a core component.
As governments around the world waver on climate commitments, in the face of weakening global cooperation on net zero goals, Chris Fidler, head of global industry standards at the CFA Institute stressed that investors are still free to allocate capital sustainably.
“I would start by drawing a distinction between what governments need to do to get to global net zero versus what private actors might do to contribute to the effort,” said Fidler.
“We are in a moment across the world where nationalism is on the rise and multilateralism is on the decline which makes international agreements to get to net zero more challenging,” he said.
Fidler stressed that despite this, governments don’t have full control over the choices investors make in terms of how they invest their money.
“If clients have a desire to invest their money in ways that align with net zero, they still have the freedom to do so.”
Fidler’s comments come as the institute has launched its net zero guide for investors — Investment innovations toward achieving net zero: voices of influence — which is an archive of 16 research papers authored by leading academics and investment industry professionals.
Fidler added that while some climate coalitions, such as the Net Zero Asset Managers (NZAM) initiative and Climate Action 100+ (CA100+) have struggled due to stringent signatory requirements, informal networks can still drive action.
A crucial aspect of this shift involves fiduciary duty, said Fidler, who added that he supports the view that climate risks are legitimate financial risks that fiduciaries must consider as part of due diligence.
He added that investors focused on long-term sustainable returns may need to navigate trade-offs between immediate profits and future stability, which is a conversation that must be had with clients.
Speaking on the institute’s own position on fiduciary duty in the context of net zero, Fidler said it is crucial for investors to consider climate risks in decision making.
“We say that climate change is real. There’s evidence for it, and it impacts the income and returns that people can earn,” he noted.
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