Only 41% of funds have set and verified science-based targets

In a report published in early April, RBS International took a look at how alternative investment funds (AIFs) are adopting science-based targets. Worsening economic conditions have slowed down progress, while regulatory pressure remains the main driver of target adoption, finds the report.

RBS International and Grist’s study, which surveyed 125 decision-makers in the AIF space in December 2022 and January 2023, covered funds domiciled in five jurisdictions (Luxembourg, UK, Jersey, Guernsey and other Western Europe) and five sectors (real estate, private equity, infrastructure, renewables and private debt).

The report found that challenging economic conditions have slowed down the adoption of science-based targets (SBTs). That being said, alternative investment funds appear to still be committed to SBTs, and their commitment has even increased since last year–90% reported that SBTs will be important to their fund in three years’ time, up from 79% in March 2022.

“The various pressures that drive the adoption of SBTs will change over time, but the pressure remains even if the causes shift,” said Bradley Davidson, ESG lead at RBS International. “The message is clear: funds must focus on future performance and the competitive advantage that solid climate change strategies aim to bring.”

Here are a few key takeaways from the report.

Adoption of SBTs has advanced very little

The report found that around four in ten survey respondents (43%) say they have already set and verified science-based sustainability targets. However, this is around the same as the figure from last year’s survey (42%), noted the report.

The other 57% of respondents plan to set targets at some point in the future, but urgency appears to have diminished, and there is more importance attached to SBTs in the future than today. Concerns about current economic conditions are amongst the most significant barriers to implementing science-based targets.