With the COP27 climate summit set to begin in Egypt on Sunday, 6 November, a group of 602 institutional investors with a combined $65 trillion in assets under management have banded together to call for governments worldwide to ‘radically raise’ their climate ambition.
In the 2022 Global Investor Statement to Governments on the Climate Crisis — described as the most ambitious to date — investors from 33 countries urged governments to implement five priority policy actions to address the climate crisis and accelerate the transition to net zero.
These include ensuring that the 2030 targets in countries’ nationally determined contributions are aligned with the goal of limiting global temperature rise to 1.5 degrees and that this is backed up by domestic policies and early action that ensure emissions are in line with reaching this goal.
“Effective policies, in line with limiting global warming to no more than 1.5°C, are essential for accelerating and scaling up private capital flows needed for a climate resilient, net zero transition,” the statement reads.
“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.
“In turn, investors can use capital allocation and stewardship to support sustainable activities that generate jobs and economic growth, make a just transition from carbon-intensive activities and increase resilience.”
The Albanese government’s Climate Change Bills, which passed the Senate in September, legislated Australia’s nationally determined contribution to the Paris Agreement, including a 43 per cent reduction in greenhouse gas emissions from 2005 levels by 2030.
The Global Investor Statement also calls for governments to contribute to a reduction in non-carbon dioxide greenhouse gas emissions and to support the implementation of the Global Methane Pledge to reduce emissions by at least 30 per cent by 2030. Australia joined the 122 other signatories to the pledge last month.
Governments have also been asked to scale up the provision of climate finance from the public and the private sector for mitigation, adaptation and resilience, with a particular focus on the needs of developing countries.
Finally, institutional investors have urged for a strengthening of climate disclosures across the financial system, including mandatory reporting for major companies and financial institutions aligned with the Task Force on Climate-related Financial Disclosures.
Signatories to the 2022 Global Investor Statement to Governments on the Climate Crisis in Australia included AustralianSuper, Aware Super, UniSuper, IFM Investors and QIC.
In the statement, the investors said that they were collectively “stepping up to the challenge”.
“More investors than ever before are making net zero commitments, embedding science-based net zero goals and strategies into their portfolio decisions, laying out Investor Climate Action Plans, engaging companies to cut their emissions and forge transition plans and calling on policymakers to deliver robust climate action,” they said.
“This is being driven by our need to decrease our exposure to climate risk as a core fiduciary duty and by the potential opportunities associated with the transition to a net-zero emissions economy. We are committed to working with governments to ensure policy mechanisms are developed and implemented to transition to a climate-resilient, net zero emissions economy by 2050 or sooner, with interim targets in line with credible 1.5°C pathways.”
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.