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Wednesday, September 28, 2022

Investors managing $41 trillion in assets urge govts to speed up climate policy or lose out

Some 457 investors managing over $41 trillion in assets have released a statement to all world governments urging a global race-to-the-top on climate policy and warning that laggards will miss out on trillions of dollars in investment if they aim too low and move too slow.

GHG emission
Greenhouse gas increases are leading to a faster rate of global warming. Photo credit: earthtimes.org

This represents the most significant initiative by investors signing on to a global statement since a first similar statement in 2009.

The “2021 Global Investor Statement to Governments on the Climate Crisis” delivers the strongest-ever investor call for governments to raise their climate ambition and implement meaningful policies, or risk missing out on a massive wave of investment in tackling the climate crisis.

In particular, the 2021 statement asks for climate-related financial reporting to not only be improved, but be mandatory, and clearly recognises the “climate crisis”. It also reflects the devastating impacts of the COVID-19 pandemic and calls for resilient economic recovery plans that support the just transition to a net-zero emissions future that is underway.

Developed by the seven founding partners of The Investor Agenda, the statement reads: “…We believe that those who set ambitious targets in line with achieving net-zero emissions, and implement consistent national climate policies in the short-to-medium term, will become increasingly attractive investment destinations…Full implementation of the Paris Agreement will create significant investment opportunities in clean technologies, green infrastructure and other assets, products and services needed in this new economy.” 

The initial signatories to the 2021 Global Investor Statement was released ahead of the G7 Summit to encourage further investor advocacy for ambitious climate policy action ahead of the UN Climate Change Conference COP26 in Glasgow in November. The statement will remain open for further institutional investors to sign until COP26 and will be periodically updated with new signatories at key moments throughout 2021.

Signatories to date include some of the world’s largest institutional investors and asset managers (see full list here). The combined assets under management of the 457 signatories is more than $41 trillion, representing an estimated 37% of all global assets under management.

This includes 51 signatory investors each managing over $200 billion in assets. It comes as the largest asset managers and asset owners are increasingly pledging to achieve net-zero emissions across their portfolios by 2050 or sooner and set interim emissions reduction targets. 

The investor signatories call on all governments to undertake five priority actions before COP26:

  • Strengthen their Nationally Determined Contributions (NDCs) for 2030 in line with limiting warming to 1.5°C;
  • Commit to a domestic mid-century, net-zero emissions target and outline a pathway with ambitious interim targets including clear decarbonization roadmaps for each carbon-intensive sector;
  • Implement domestic policies to deliver these targets, incentivise private investments in zero-emissions solutions and ensure ambitious pre-2030 action; including: The removal of fossil fuel subsidies by set deadlines; the phase out of thermal coal-based electricity generation by set deadlines in line with credible 1.5°C temperature pathways; the avoidance of new carbon-intensive infrastructure such as coal power plants; and the development of just transition plans for affected workers and communities.”
  • Ensure COVID-19 economic recovery plans support the transition to net-zero emissions and enhance resilience; and
  • Commit to implementing mandatory climate risk disclosure requirements aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

Many nations already have or have vowed to improve their climate policies, including 2030 emissions reduction targets, through updated NDCs ahead of COP26. However, significant climate policy and finance gaps remain in almost all nations, and the world is currently not on a trajectory to meet the objectives of the Paris Agreement, underscoring the need for further ambition.

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