A record 733 institutional investors from around the world, with more than US$52 trillion in assets under management, have signed an ambitious statement to governments ahead of COP26, calling for a number of measures that would help avoid catastrophic temperature rise and manage climate risk. These include measures to end fossil fuel subsidies, phase out thermal coal-based electricity, and mandate climate risk disclosure.
The 2021 Global Investor Statement to Governments on the Climate Crisis was officially launched today, after public announcements in June and September with investor signatories managing US$41 trillion in assets, and US$46 trillion, respectively. The US$52 trillion in managed assets announced today represents more than half of all managed assets globally, and is the largest-ever collective assets under management to sign on to such a statement.
Signatories include some of the world’s largest investors, including State Street Global Advisors, PIMCO, AMUNDI, Legal & General Investment Management, Franklin Templeton Investments, UBS Asset Management, Aegon NX, Insight Investment AXA Investment Managers, DWS Group, Schroders, Sumitomo Mitsui Trust Asset Management, Aberdeen Standard Investments, AllianceBernstein, Fidelity International, Aviva Plc, BNP Paribas Asset Management, MFS Investment Management, and Allianz Global Investors.
The investors argue that the right policies would unlock the trillions of dollars of investment needed in solutions to the climate crisis. This includes policy signals in line with efforts to limit temperature rise to no more than 1.5-degrees Celsius, including significantly stronger 2030 nationally determined contributions (NDCs), credible commitments to net-zero greenhouse gas emissions by mid-century, and the development of just transition plans for affected workers and communities. It also calls on governments to avoid public investment in new carbon-intensive infrastructure in their COVID-19 economic recovery plans.
“Our ability to properly allocate the trillions of dollars needed to support the net-zero transition is limited by the ambition gap between current government commitments (as set out in NDCs) and the emissions reductions needed to limit global average temperature rise to 1.5-degrees Celsius,” the statement reads.
The statement also evidences the overwhelming investor support for mandatory climate risk disclosure in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). “As owners of (or those representing owners of) companies, we need access to adequate information on how these companies are assessing and managing the risks and opportunities presented by climate change,” the investors write.
Debby Blakey, CEO of HESTA superannuation industry fund in Australia, said: “Global investors are increasingly focusing on identifying the enormous opportunities arising from the need to transition our economy for a low carbon future. Countries risk missing out on this wave of investment capital if they don’t get the policy settings right.”
Rebecca Mikula-Wright, CEO of AIGCC and IGCC, and member of the Investor Agenda Steering Committee, said: “The net zero emissions transition is inevitable and already underway. Investors want to seize the enormous investment opportunities worth trillions of dollars that will be created in the transition to net zero. There is a huge opportunity to create new jobs and boost economic growth, but only for those countries that get ahead of the curve. Across Asia, Australia and New Zealand, we call on governments to unite and join the strongest-ever call ahead of COP26 to step up. We urge them to commit to clear and strong climate policies that will unlock the capital needed to transition to a net-zero economy.”
Fiona Reynolds, CEO of PRI, and member of the Investor Agenda Steering Committee, said: “It’s now time for governments around the world to move from commitment to action on climate change. It’s increasingly clear that efforts to cut emissions have not gone far enough to ensure the planet stays below the vital 1.5 degrees of warming threshold. The financial services industry acknowledges that it has a vital role to play in facilitating the transition to net zero, but the industry can’t achieve this alone. Firms across the sector need national and international policy to reflect their own commitments to addressing climate change. The Global Investor Statement shows the scale of ambition to make meaningful strides towards net zero from across the sector, and challenges world leaders to match these pledges, as well as to back up promises with tangible action.”
The founding partners encourage investors worldwide to commit to developing comprehensive Investor Climate Action Plans (ICAPs) and to aligning their investments with the goal of net-zero emissions by 2050 or sooner, with credible interim targets, among other actions. Signing the statement qualifies as an action taken under the Policy Advocacy component of the ICAPs.