A number of large insurers and investment firms have signed a joint statement urging the governments of G20 nations to cease fossil fuel subsidies by 2020.
The statement was signed by 16 businesses whose combined assets under management represent US$2.8 trillion – including Legal and General, Aviva Investors, Australian Ethical, La Francaise and Trilogy Global Advisors – and described government subsidies for fossil fuels as a “key concern” to the finance sector.
“They increase the risk of stranded fossil fuel assets, decrease the competitiveness of key industries, including low‐carbon businesses, and negate the carbon price signals many of us have been calling for. They are also notoriously inefficient from an economics standpoint,” the statement said.
“They create a significant burden on government budgets, perpetuate income inequality by benefiting the richest consumers while failing to meet the energy needs of those lacking energy access, and damage public health by increasing air pollution.”
Legal and General head of sustainability and responsible investment strategy Meryam Omi said G20 governments needed to issue a “clear plan” to phase out these subsidies.
“The current level of inefficient subsidies and lack of transparency are jeopardising the global goal of meeting the Paris climate targets and of ensuring a secure, healthy and reliable energy system,” she said.
“As investors, we are faced with a tremendous opportunity to finance the low carbon transition and, as such, we look for the governments to set a clear timeline and a plan for phasing out fossil fuel subsidies to enable an orderly transition.”