The report, which UN secretary-general Antonio Guterres described as a “code red for humanity”, suggested that temperatures will rise by more than 1.5 degrees Celsius above pre-industrial levels and that goals established in the 2015 Paris Agreement will be missed without cuts to emissions.
“In our view, this should be yet another ‘wake-up call’ for governments to set ambitious, credible climate targets that cover both mitigation and adaptation along with policies that can be implemented as soon as possible,” HSBC’s global research team said on Tuesday.
“We think investors will demand much more of businesses: For those in high-carbon activities to rethink business models and strategies; for industries to be more innovative in lower carbon solutions; for all segments of the economy to prepare for the impacts of climate change.
“With attention rapidly turning to COP26 in November, climate change will remain high on the agenda as the ‘make-or-break’ discussions occur before the next AR6 reports come in early 2022.”
Meanwhile, COO of Man Group and head of ESG, Robyn Grew, said the report requires a swift response by the financial services sector.
“The UN’s latest report… represents an existential risk, including how we run our businesses, how asset managers will manage clients’ money and how we can contribute to society,” Ms Grew said.
“It’s incumbent upon the financial services industry to assume greater responsibility and act as powerful drivers for much-needed climate action.
“Collaboration will be key as no one organisation can solve this alone.
“We must evaluate climate risk, engage with companies, vote for climate action and continue to decarbonise our portfolios. The sum of these actions sends an unequivocal message that we recognise the importance of managing climate risk for our clients, employees, stakeholders and the environment.
“Many have done so already, but we would encourage all asset managers to sign up to the Net Zero Asset Managers initiative as a first step.”
Federated Hermes’ head of investment, Eoin Murray added: “[T]he most important piece of the latest IPCC report must be that we are today in our last decade to take the necessary actions to avoid the horrors of predicted climate change, and that it is still within our gift to make the required changes.
“And with consensus achieved with all UN governments before the release of the report, no government has an excuse to duck their responsibilities now.”
Mr Murray said the investment management industry must play its part by “encouraging the transition through full engagement with corporates and integration of ESG metrics”.
