Investors plan major move into renewable energy infrastructure

Global investors managing nearly $7tn (£5.2bn) of assets plan to almost double their spending on renewable energy infrastructure over the next five years amid deepening concerns over the fossil fuel industry’s climate plans, according to a report.

A survey of institutional investors found that they are planning to increase their renewable energy investments from 4.2% of their overall portfolio to 8.3% in the next five years and 10.8% within the next decade to about $742.5bn.

The survey of more than 100 investors, representing $6.9tn of assets under management, found that 83% did not believe the plans put forward by oil and gas companies would be enough to meet the Paris climate agreement goals.

More than half of the investors in the survey, which was undertaken by the specialist fund manager Octopus Renewables, said the oil industry’s record on investing in renewables was “more style than substance” and represented “nothing more than greenwashing”.

Alex Brierley, the co-head of Octopus Renewables, said renewables have “proved an incredibly attractive asset class in the face of this year’s volatility, buoyed both by growing external pressures to invest responsibly, and by investors looking for long-term sources of yield”.

He added: “There is further progress to be made however, and alongside renewables investment, divestment from fossil fuels also remains key.”

The survey also revealed that many investors have slowed their plans to divest from the oil and gas sector because of the financial uncertainty caused by the coronavirus crisis.

On average, investors have divested 4.5% of fossil fuels from their overall portfolio in 2020, compared with 5.7% forecast for 2020 in last year’s survey. They have slowed their long-term divestment plans too, from 14.4% within the next five years and 15.6% in the next 10 years set out in last year’s survey to 5.2% and 8.6% respectively in the latest results.

Matt Setchell, the other co-head of Octopus Renewables, said governments, investors, specialist managers and energy companies must be willing to work together to use the Covid-19 pandemic as a “catalyst to a greener, more sustainable future”.

“We are now at a crossroads and must seize this opportunity to build a global post-pandemic economic recovery that also opens up the renewable energy sector to attract the capital needed to tackle climate change. If we don’t act together, and if we don’t act now, it will be too late,” he said.

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