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Climate change is a 'global systems problem'

Climate change is a 'global systems problem'

The wealth management industry cannot solve climate change on its own, and there were significant elements missing from the Cop26 agreement, said Eoin Murray, head of investment at Federated Hermes.

Speaking on the latest edition of the FTAdviser podcast about the outcome from the Cop26 summit in Glasgow, Murray said the devil was in the detail of the agreement.

“So much of it is promissory and that always makes me nervous,” he said.

“We also need to bear in mind that we will never solve [climate issues] ourselves, as investors or as an industry, it always had to be part of a bigger package and I think there are still some significant elements missing from the bigger package in terms of regulation, policy etc, although again, a number of improvements in a couple of areas will have got us further down the path [to net zero].”

When asked if he favours an activism or divestment strategy to influence climate harming companies to change their practices, Rob Harley, a portfolio manager in the sustainable funds group of Stewart Investors, said there was no clear answer.

“The answer is not uniform or clear cut, it depends on the company, on its history and track record and how entrenched it is in doing certain profitable things that cause us difficulty and how ambitious and visionary its leaders are about making change,” he said.

Murray added the solution may require a complete overhaul of the global financial system.

“This is a global systems problem, [and the question is] are we out of time to wholesale change the manner in which we do things?

“Is capitalism a part of the answer...it’s the system that got us here but it is the system that will get us out?”

sally.hickey@ft.com