Investors managing more than $41trn (£29trn) in assets have released a joint statement calling on all world governments to raise their climate ambitions, or risk missing out on trillions of dollars.
This represents the largest collective assets under management backing a global investor statement to governments on climate change since 2009, with BT Pension Scheme and Legal & General Investment Management among the 457 signatories.
It asks for climate-related financial reporting to not only be improved, but be mandatory, and to clearly recognise the “climate crisis”.
The statement also reflects the devastating impacts of the COVID-19 pandemic, and calls for resilient economic recovery plans that support the a just transition to a “net-zero emissions future”.
“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,” 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.”
The signatories represent an estimated 37% of all global assets under management, including 51 investors each managing over $200bn.
Specifically, the statement calls on governments to:
- Strengthen their nationally determined contributions (NDCs) for 2030 in line with limiting warming to 1.5°C
- Commit to a domestic mid-century, net-zero emissions target, and outline a pathway with ambitious interim targets, including clear decarbonisation roadmaps for each carbon-intensive sector
- Implement domestic policies to deliver these targets, incentivise private investments in zero-emissions solutions and ensure ambitious pre-2030 action, including: the removal of fossil fuel subsidies by set deadlines, the phase out of thermal coal-based electricity generation by set deadlines, the avoidance of new carbon-intensive infrastructure 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
- Commit to implementing mandatory climate risk disclosure requirements aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
The statement will remain open for further institutional investors to sign until the COP26 climate summit in November.
Michelle Scrimgeour, CEO at Legal & General Investment Management, and co-chair of the UK government’s COP26 Business Leaders Group, said: “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.
“I am encouraged by the progress we are already making, though there is still much to be done and we all need to play our part – inaction is simply not an option.”
Image credit: iStock
Author: Chris Seekings