In response to the release of climate change scenarios and an inquiry into the potential macroeconomic impacts of climate change by global central banks, working through the Network for Greening the Financial System, Chief Executive Officer of the Investor Group on Climate Change, Emma Herd, said: 

“These scenarios prepared by the world’s central banks, including the Reserve Bank of Australia, clearly demonstrate climate change is a systemic economic threat that will significantly undercut our prosperity and job security.

“Financial regulators are now responding to this economic risk, as are institutional investors who are increasingly wary of carbon-intensive assets and looking for opportunities that will accelerate the net-zero emissions transition

“A transition is inevitable. Early action reduces the cost of the transition to net-zero emissions by 2050 substantially and helps avoid severe and irreversible impacts from climate change itself.

“In Australia, this will require a stable long-term policy framework and a commitment to net-zero emissions by 2050. The alternative is sitting on our hands which will continue to expose Australia to decarbonisation efforts across the world while not gaining access to new opportunities that will stem from modernising the economy.

“These scenarios will underpin efforts by the Reserve Bank of Australia and financial supervisors to provide a consistent basis for companies to disclose their climate risk exposure. Companies should no longer be able to cherry pick climate scenarios that suit their preferred business strategy and instead make clear climate risk assessments that allow investors to determine their true value.

“Governments should also apply these climate scenarios to their own policy decisions, including COVID-19 economic recovery efforts, to ensure taxpayer expenditure is not put at risk by locking in support for carbon-intensive activities.”

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The following is a joint statement from: Australian Conservation Foundation, Australian Council of Social Service, Australian Council of Trade Unions, Australian Energy Council, Australian Industry Group, Brotherhood of St Laurence, Business Council of Australia, Carbon Markets Institute, Energy Efficiency Council, Energy Users’ Association of Australia, Investor Group on Climate Change, Master Electricians Australia, Property Council of Australia, St Vincent de Paul Society and WWF Australia.

Our diverse organisations together call for support for COVID economic recovery to urgently stimulate jobs and to rebuild a sustainable and strong economy.

Australia faces a public health emergency with immediate economic impacts as well as longer-lasting global economic pain. Beyond the pandemic, Australian prosperity also depends on dealing with other long-term challenges – including the transition to net zero emissions. Economic recovery efforts can and should contribute to addressing these long term challenges. Our organisations encourage governments to bolster their jobs and recovery strategies with measures to reduce emissions and accelerate successful energy transitions across all Australia’s regions and economic sectors.

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In response to the Morrison Government’s discussion paper on its Technology Investment Roadmap, Investor Group on Climate Change (IGCC) Director of Policy, Erwin Jackson, said:

“The government’s plan reveals the huge opportunities to reduce emissions right across the Australian economy through technology and projects that would create fresh investment, economic growth and job creation.

“The discussion paper largely considers policy options that would guide taxpayer investment in technology development. But equally important is consideration of how Australia can unlock further private capital into the commercialisation and deployment of net-zero emissions technologies.

“With governments likely to be more fiscally constrained in coming years due to the impact and response to the COVID-19 pandemic, private capital will be critical to ensuring a smooth transition to net-zero emissions.

“Unlocking this private capital will require a clear signal through an integrated and robust national climate policy suite that Australia is heading for net-zero emissions by 2050 consistent with our international obligations.

“Private investors are already making climate risk assessments in their portfolios about carbon-intensive fuels like gas as compared to zero-carbon alternatives like renewable energy and storage technologies. Governments will also need to assess whether further support and investment in gas projects are resilient to continued rapid cost reductions in clean energy options and an accelerated shift to truly zero-emissions energy options.

“IGCC welcomes that the government will seek specific consultation with the finance sector in further developing its Technology Investment Roadmap, and we look forward to engaging on the opportunities to accelerate private investment flows into zero-carbon technologies.

“Unlocking billions of dollars of investment in new industries and new jobs requires a strong partnership between government and institutional investors. Government investment alone will not address the systemic risks that climate change presents to the Australian economy.”

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In response to proposed changes of the Morrison Government’s climate change policies, Investor Group on Climate Change (IGCC) Chief Executive Officer, Emma Herd, said:

“To unlock significant private investment, governments need to establish a comprehensive and stable policy framework that addresses emissions from all sectors of the economy with a clear goal of reaching net-zero emissions by 2050.

“Private sector investment and robust carbon markets will be critical to ensuring Australia can reach net-zero emissions by mid-century.

“Investors are increasingly concerned about climate change risks to their portfolios and are looking to deploy capital into clean energy and technology projects that will provide sustainable returns to their beneficiaries over decades.

“However, the structural weaknesses in the Climate Solutions Package remain unaddressed. If Australia is to meet its short and long-term obligations under the Paris Agreement, caps on industrial emissions under the safeguards will need to be tightened over time or significantly larger amounts of taxpayer’s money will need to be committed to purchase emissions reductions at higher prices.

“Tightening the safeguard baselines would accelerate private sector demand for abatement, removing the need for governments to purchase on budget significant emissions cuts.

“Expanding the remit of the Clean Energy Finance Corporation (CEFC) to include a broader range of sectors can also support technology and finance innovations across the economy if aligned with the objectives of the Paris Agreement. Allowing the CEFC to invest in climate change adaptation measures can also support building a clean and resilience economy.

“We recognise Energy Minister Angus Taylor’s aim of seeking dollar-for-dollar matching investment in developing low emissions technology through the government’s Technology Investment Roadmap and look forward to engaging with the government to capitalise on global investment trends towards renewable energy and green industrial production.”

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International investor groups, including the Investor Group on Climate Change (IGCC), have encouraged global governments to ensure they are planning for a sustainable recovery from the COVID-19 pandemic by factoring in climate change risk into economic recovery plans.

The global statement, which has been sent to G20 countries and New Zealand, reinforces that governments’ first priority amid the COVID-19 pandemic is to save lives and provide financial relief to support the most vulnerable.

As governments look to spark longer-term economic recovery, the investor groups warn locking in carbon-intensive economic activities will only exacerbate systemic climate risk and expose economies to escalating shocks. The groups say governments should instead look to drive efficient private capital investment, that can create fresh employment and economic growth, by prioritising net zero emissions projects in areas like infrastructure, transport, property and energy.

The global statement is signed by the heads of the founding partner organisations of The Investor Agenda, including IGCC, the Asia Investor Group on Climate Change, the Institutional Investor Group on Climate Change, Ceres, Principles for Responsible Investment, CDP and the United Nations Environment Programme Finance Initiative.

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Read the Sustainable Recovery Statement

The mandate of the Clean Energy Finance Corporation (CEFC) should be expanded to allow the green bank to spur private capital investment in climate change resilience projects as part of reforms recommended by the Investor Group on Climate Change (IGCC) in its submission to the Royal Commission into National Natural Disaster Arrangements.

IGCC, which represents institutional investors with over $2 trillion in assets under management, warned in its submission that failure by Australian governments to plan today for future damage from climate change will increase economic risks, costs and impacts across the community.

To better prepare communities and the financial sector for the unavoidable impact of climate change, the submission recommends, among other measures, that governments:

• Extend the mandate of the CEFC and bolster its budget to help co-fund resilience and adaptation projects. Financing options that could be considered include pooling smaller projects to attract private sector co-investment and resilience bonds.
• Implement mandatory reporting of climate-related financial disclosures to stop the underreporting of climate change exposure by companies and ensure investors can make full risk assessments and better price risk.
• Conduct a national assessment of the infrastructure at risk from climate change and begin mapping out an adaptation roadmap including the indicative investment need.
• Revise the National Construction Code to explicitly account for climate change threats.
• Establish a National Climate Services Capability to better coordinate the provision of climate data between the Bureau of Meteorology, CSIRO, academia and other private and public sector actors.

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Read the IGCC Submission

The Investor Group on Climate Change (IGCC) welcomes the release of the Climate Change Authority’s Climate Policy Toolkit for Australia, with a strong focus on creating investable policies which support the transition to a net zero emissions economy by 2050.

In response to the release of the report, IGCC Chief Executive Officer, Emma Herd, said:

“Large institutional investors understand the systemic risk climate change poses to long-term sustainable returns and our economy as a whole. Investors expect policymakers to work towards mitigating economic risks from climate change by ensuring a smooth transition to net-zero emissions by 2050.

“In updating its policy recommendations for the Australian Government, the Climate Change Authority has put forward a number of welcome proposals that recognises the critical role of investors in the zero-emissions transition.

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In response to the Federal Opposition’s recommitment to a net-zero emissions target for 2050, Emma Herd, Chief Executive Officer of the Investor Group on Climate Change said:

“We are seeing an increasing consensus among investors and the business community that a 2050 net-zero emissions target constitutes the responsible economic management needed to address systemic climate change risk.

“Only today we have seen the Australian Prudential Regulation Authority flagging that it will stress test major financial institutions on climate risk. Other important financial regulators like the Reserve Bank and ASIC have also recognised that climate change presents a material risk to our economic prosperity.

“Meeting the goals of the Paris Agreement will significantly de-risk the Australian economy by guarding against the ratcheting physical and financial impacts of climate change such as worsening extreme weather, rising insurance premiums and the prospect of stranded assets.

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Investors continue to adopt new targets and strategies for pursuing net-zero emissions by 2050 and investing in climate solutions, according to a new report released today by the Investor Group on Climate Change (IGCC).

The new report – Zero Emissions/Sustainable Returns – is a practical guide for investors on strategies to pursue net-zero emissions portfolios while ensuring sustainable returns.

The report details current investor thinking, real-world examples of how investors are transitioning to net-zero emissions and the overall state of play in investor practice. It is intended to support investor ambition and accelerate practical action on setting net-zero investment strategies.

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Download the Report

Australia can boost its climate change resilience and accelerate emissions reductions with policies that unlock private capital, the Investor Group on Climate Change (IGCC) said in response to Prime Minister Scott Morrison’s address to the National Press Club.

IGCC Chief Executive Officer, Emma Herd, said Australia needed prudent management of climate risks that would reduce the financial, economic and community costs of climate change. This includes physical risks, such as worsening drought and fires, and the economic risk of a disorderly shift to net-zero emissions.

“Investors are already making decisions on whether or not to deploy capital in Australia on the basis of their own climate change risk assessments,” Ms Herd said.

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