Investors with 40% Global AUM Urge Action on Climate Change09.14.2021
In the run-up to the most consequential United Nations climate change conference in years, and on the heels of another urgent warning from the world’s leading scientists, a record number of 587 investors with US$46 trillion in assets under management are urging governments to rapidly implement five priority policy actions that will allow them to invest the trillions needed to respond to the climate crisis.
587 investors with 40% of the world’s AUM signed the @InvestorAgenda 2021 Global Investor Statement to Governments on the Climate Crisis.
This is big news, and signals a race to the top for climate policy at #COP26.
— IGCC Update (@IGCC_Update) September 14, 2021
Signatories to the 2021 Global Investor Statement to Governments on the Climate Crisis are issuing the strongest-ever unified call from investors for governments to raise their climate ambition and implement meaningful policies — including mandatory climate risk disclosure, strengthened national commitments, ending fossil fuel subsidies and phasing out thermal coal — or risk missing out on the enormous investment opportunities in tackling the climate crisis.
“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 statement reads.
Following a month which brought more catastrophic weather events around the world, and the alarming predictions of the Intergovernmental Panel on Climate Change that without immediate, rapid and large-scale emissions reductions, limiting global warming to 1.5 degrees Celsius will be beyond reach. The risks this brings to the portfolios of asset managers and owners are enormous.
Investor signatories to the statement are calling on all governments to undertake five priority actions before the 26th United Nations Climate Conference in Glasgow in November (COP26):
- Strengthen their NDCs for 2030 before COP26, to align with limiting warming to 1.5-degrees Celsius and ensuring a planned transition to net-zero emissions by 2050 or sooner.
- 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, incentivize private investments in zero-emissions solutions and ensure ambitious pre-2030 action through: robust carbon pricing, 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-degrees Celsius temperature pathways, the avoidance of new carbon-intensive infrastructure(e.g. no new 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. This includes facilitating investment in zero-emissions energy and transport infrastructure, avoiding public investment in new carbon-intensive infrastructure and requiring carbon-intensive companies that receive government support to enact climate change transition plans consistent with the Paris Agreement.
- Commit to implementing mandatory climate risk disclosure requirements aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, ensuring comprehensive disclosures that are consistent, comparable, and decision-useful.
The second wave of signatories to the statement are being announced during the United Nations General Assembly, which will be followed by Climate Week 2021 in New York, when countries will be in the spotlight to demonstrate their climate ambition. The initial signatories to the statement, which included 457 investors with US$41 trillion assets under management, were announced in June 2021, before the G7 Summit.
Signatories to date include some of the world’s largest institutional investors and asset managers and asset owners. The combined assets under management of the 587 signatories is more than US$46 trillion, representing an estimated 40 percent of all global assets under management. This is the largest collective assets under management to sign on to a global investor statement to governments on climate change since the first statement in 2009.
The statement remains open for additional investors to sign before COP26 in November 2021.
Many nations are already improving their climate policies, including 2030 emissions reduction targets, through updated NDCs ahead of COP26. However, significant climate and finance policy gaps remain in almost all nations, and the world is currently not on a trajectory to limit global warming to 1.5 degrees Celsius, underscoring the need for further ambition.
The statement has been developed by The Investor Agenda’s seven founding partners –– Asia Investor Group on Climate Change, CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change, Principles for Responsible Investment and UNEP Finance Initiative. The Investor Agenda provides a common leadership agenda on the climate crisis for investors that is unifying, comprehensive, and focused on accelerating investor action for a net-zero emissions economy.
The founding partners are calling on investors that support increased government ambition on the climate crisis to sign on to the statement via the Investor Agenda website. They are also encouraging investors worldwide to commit to developing comprehensive Investor Climate Action Plans (ICAPs) and to aligning their investments with the goal of net-zero emissions by 2050 or sooner, with credible interim targets, among other actions. Signing the 2021 Global Investor Statement to Governments on the Climate Crisis would itself qualify as an action taken under the Policy Advocacy component of the ICAPs.
Supporting quotes from the founding partners of The Investor Agenda:
CEO of the Asia Investor Group on Climate Change (AIGCC) and Investor Group on Climate Change (IGCC) (Australia/New Zealand) and Investor Agenda Steering Committee member, Rebecca Mikula-Wright, said: “Our analysis shows that the investment opportunities in the Asian energy sector alone from a Paris-aligned transition to net-zero emissions could reach US$37 trillion by 2050 – a century-defining investment theme. Meanwhile in Australia, stronger climate policies would create around US$46 billion in fresh investment opportunities to 2025. By working with investors to put in place robust policies, strong targets and a clear roadmap to reach net-zero emissions, Asian, Australian and New Zealand governments can unlock these enormous investment opportunities and the jobs, economic growth and competitive advantage they will bring.”
CDP Chief Executive Officer and Investor Agenda Steering Committee member, Paul Simpson, said: “The number and calibre of institutional investors that have signed the 2021 Global Investor Statement shows governments that, if – and only if – the right policy framework and science-based targets are put in place, the ambition and capability are there to put capital behind the transformation required for achieving a net-zero economy. We are seeing once again that there is huge mitigation and adaptation potential waiting to be unlocked – Governments should be using the momentum of corporate progress to advance ambitious, net-zero aligned policies that tackle the broader environmental impact and in turn provide companies and financial institutions with further clarity and confidence. So, it’s critical that COP26 drives an increase in the adoption of robust 2030 targets and net-zero long-term goals for a 1.5°C, resilient future, where climate and nature are tackled on an equal footing.’’
Ceres CEO and President and Investor Agenda Steering Committee member, Mindy Lubber, said: “The stakes could not be higher as we come off another summer of extreme heat, hurricanes, and drought. This is a make-or-break decade for mitigating the climate crisis. Investors must invest more of the trillions under their management into climate solutions and support mandatory climate risk disclosure rules. With the right climate policies in place, massive investments can flow into economies, create jobs and opportunity and accelerate the transition to a more just and sustainable net zero emissions future.”
Institutional Investors Group on Climate Change (IIGCC) CEO and Investor Agenda Steering Committee member, Stephanie Pfeifer, said: “Investors globally are using their influence to call on governments to raise their ambition when it comes to tackling the climate crisis and delivering robust and credible climate policy. These policies are essential to support progress towards a net zero economy and drive future investment in emerging technologies and infrastructure that could help limit global warming to 1.5°C. With COP26 looming, now is the time for governments to take action together.”
Principles for Responsible Investment (PRI) Chief Executive Officer and Investor Agenda Steering Committee member, Fiona Reynolds, said: “The scale of the challenge we now face, to address the causes of man-made climate change and secure the future of our planet, has never been more apparent. Now is the time for all parties to move from commitment to action on climate change. The Global Investor Statement demonstrates the appetite for policy to support the measures being implemented by investors – including steps such as pricing greenhouse gas emissions, ending fossil fuel subsidies and supporting a shift away from high-emitting sources of energy.”
United Nations Environment Programme Finance Initiative (UNEP FI) Head and Investor Agenda Steering Committee member, Eric Usher, said: “The rapid transformation among global investors transitioning to net-zero emission pathways has been extremely encouraging of late, driven in part by action the Investor Agenda is taking through the International Climate Action Plans (ICAPs). To date 27 of the Top 100 global investors defined by total assets worldwide and 86 investors outside of the Top 100 have already committed to issuing an ICAP. To build momentum further we need governments to fully support this transformation by putting in place the right policy frameworks that reinforce the essential climate-focused capital mobilisation.”
The complete text of the 2021 Global Investor Statement to Governments on the Climate Crisis, including the names of the investor signatories, is available on The Investor Agenda website here.
Source: The Investor Agenda
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