457 investors managing more than a third of global assets have released a joint statement urging world governments to strengthen climate policy, or risk losing out on “trillions of dollars in investment”.
The statement was coordinated by the founding partners of The Investor Agenda, and 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 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.
The statement was released just ahead of the G7 summit, and 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.”
Signatories to date include some of the world’s largest institutional investors and asset managers, including Aviva, HSBC Asset Management and Legal and General Investment Management. The combined assets under management of the 457 signatories is more than US$41 trillion, representing an estimated 37 percent 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.
End support for fossil fuels
The investor signatories call on all governments to undertake five priority actions before COP26 in November, including strengthening their Nationally Determined Contributions (NDCs) for 2030 and implementing domestic policies to deliver on reduction targets. It also calls for the removal of fossil fuel subsidies and the phase out of thermal coal-based electricity generation by set deadlines, in line with credible 1.5°C temperature pathways.
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.
Michelle Scrimgeour, Chief Executive Officer, Legal & General Investment Management and co-chair of the UK Government’s COP26 Business Leaders Group, said: “Climate change is one of the greatest systemic risks we face today and achieving net-zero by 2050 will be crucial to help steer the world towards a more sustainable future. We will need to see substantial change across industry and society globally to achieve this goal. As long-term investors we play a pivotal role, not only in decarbonising investment products on behalf of our clients but also influencing the real economy transition by engaging with and holding businesses accountable on their net-zero transition plans.”
