India Asset Management Companies show gaps in climate risk preparedness

A new assessment by research group Climate Risk Horizons, titled Risking Alpha II, reveals significant gaps in how India’s leading asset management companies (AMCs) prepare for financial risks associated with climate change.

The report evaluated 12 major fund houses that collectively manage over 80% of the domestic mutual fund industry’s assets. While the study noted improvements in disclosure, governance, and stewardship practices compared to previous years, it highlighted persistent weaknesses in portfolio-level risk management, emissions reporting, and investment decision-making.

Key findings include a lack of climate-related scenario analysis and portfolio stress testing, with none of the evaluated AMCs disclosing the use of standardized international climate scenarios, such as those from the Intergovernmental Panel on Climate Change (IPCC). Additionally, the report identified coal policy as a major gap, noting that none of the 12 fund houses have disclosed a coal policy that applies across all their funds.

UTI Asset Management Company achieved the highest score of 12 points, followed by SBI Funds Management with 11 points. ICICI Prudential, HDFC, Nippon Life India, Kotak Mahindra, and DSP Asset Managers shared third place with 10 points each. Other firms, including Axis, Mirae Asset, Tata, and Bandhan, also showed modest improvements.