CGM Directors’ Masterclass Series 2025 – Session 4: Responsible Climate Risk Management by Investors

Speaker: Ms Liza Jansen, Head of Responsible Investment at Prudential

Moderator: Dato’ Seri Johan Raslan, Council Member, Climate Governance Malaysia

The 4th Session of the Climate Governance Malaysia’s Directors’ Masterclass Series 2025 was held on Friday, 31 October 2025. 

Moderated by Dato’ Seri Johan Raslan, this session explored how institutional investors manage climate risks and avoid biases in investment decisions. Liza Jansen who is the Head of Responsible Investment at Prudential highlighted the company’s climate strategy, emerging-market engagement approach, and transition-finance initiatives across Asia and Africa.

Prudential manages US$ 275 billion in assets, much of it in emerging markets such as Malaysia, Vietnam, and Thailand, where regulation often requires local investment. The firm has committed itself to becoming a Net-Zero Asset Owner by 2050, with a target to reduce portfolio emissions by 55% by 2030. These commitments are fully aligned with the Paris Agreement and are tied to executive remuneration, reinforcing accountability at the highest levels. She also emphasised that responsible investment is not discretionary; climate change represents a material systemic financial risk, and managing it forms part of Prudential’s fiduciary duty.

A central theme to this discussion was the need to balance global sustainability standards with local realities. Liza highlighted that applying a single global rulebook to emerging markets is ineffective and often counterproductive. While global stakeholders may pressure investors to divest from high-emitting sectors, Prudential instead prioritises constructive, long-term engagement particularly with companies in hard-to-abate sectors such as utilities. In markets like Malaysia, divestment may reduce both influence and financial performance. Prudential therefore works closely with local management teams, often through native-language engagement and, importantly, via debt channels, which can be more influential than equity in Asia. Board-level engagement is used selectively to strengthen governance and ensure credible climate transition plans.

Recognising that global taxonomies do not always reflect emerging-market conditions, Prudential developed its own transition-finance framework, published in 2021, to support both green assets and companies with credible transition pathways. This framework incorporates differentiated national timelines acknowledging, for example, India’s 2070 net-zero target versus the European Union’s 2050 deadline. Liza stressed that emerging markets represent 60% of current global emissions and 90% of future emissions growth, making transition finance critical for both climate and financial objectives.

On data and ESG assessment, Liza cautioned against over-reliance on third-party ESG ratings, noting their subjectivity and low correlation across providers. Instead, Prudential emphasises underlying data such as verified carbon metrics, governance quality and increasingly relies on assurance frameworks like the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD), alongside AI-enabled analysis to identify greenwashing and controversies. While engagement is the primary lever, Prudential’s risk appetite policy allows for divestment when companies demonstrate poor risk management or fail to make credible progress.

Prudential also engages actively with policymakers to help create enabling environments for energy transition and resilient capital markets. Liza highlighted that climate change is a systemic risk that cannot be addressed by companies alone; coordinated efforts between governments, regulators, investors, and businesses are essential. Prudential uses its regional insights to help regulators tailor global standards to local market contexts.

Additionally, Prudential is advancing investment strategies for nature and biodiversity, though Liza acknowledged the complexity created by differing ecosystems and a lack of standardised metrics. Unlike carbon, biodiversity indicators must be locally defined. Prudential focuses on scalable nature-positive solutions such as sustainable agriculture, circular resource systems, and water management, while cautioning against global frameworks that oversimplify concepts like deforestation and reforestation. She also stressed that emerging markets must be able to develop sustainably without repeating the environmental trajectory of developed economies, and that financial mechanisms should support this transition.

In conclusion, Liza’s message to directors was clear: climate risk management is mandatory, and investors will increasingly scrutinise governance, data quality, and credible transition plans. Companies must align global ambition with local practicality, design targets that avoid unintended consequences, and build strong internal capabilities. Those that do so will not only attract capital but also be better positioned to influence policy and shape sustainable markets.

Click here to watch the recording

Click here for the photos and slides.