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Investors managing $41trn of assets call for bolder national climate plans

More than 450 investors managing $41trn in assets have teamed up to urge world leaders to step up their climate ambition in what has been billed as the “strongest-ever investor call” for governments to tackle the climate emergency.

In a joint statement convened by the seven founding partners of The Investor Agenda, the investors said countries that introduce ambitious climate policies and targets would become “increasingly attractive investment destinations” as demand surges for clean technologies, green infrastructure, and other assets that can deliver a net zero economy.

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Weak climate ambition from governments to date is currently hampering financiers’ ability to roll out mass investment programmes in infrastructure and services that are critical to the net zero transition, the statement warned.

“Investors are urgently seeking to decrease their exposure to climate risk as a core fiduciary duty and benefit from the opportunities associated with the transition to a net zero emissions economy,” it added. “However, 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 and the emission reductions needed to limit global average temperature rise to 1.5C.”

The 2021 Global Investor Statement has so far been signed by 457 signatories that represent an estimated 37% of all global assets under management, the Investor Agenda said. It will remain open for further institutional investors to sign until the pivotal COP26 climate talks in November, the group confirmed.

Aberdeen Standard Investments, State Street Global Advisors, Schroders, Legal & General Investment Management, Allianz Global Investors, HSBC Asset Management, Aviva and Amundi are more than four dozen investors with assets over $200bn that have signed the statement.

Mindy Lubber, chief executive officer of Ceres, one of the seven investor networks behind The Investor Agenda, emphasised that weak climate change policies would damage national economies. “If a government has weak climate change policies, its national market is a less-attractive destination for billions, if not trillions, of dollars,” she said. “But if a government gets its climate policies right, then massive investments will flow into its economy and help accelerate a more equitable, just and sustainable net zero emission future.”

The document calls on governments to strengthen their national climate action plans – known as Nationally Determined Contributions (NDCs) in the UN jargon – in line with limiting global temperature rise to 1.5C and establish medium-term climate targets and decarbonisation roadmaps for carbon intensive sectors, in addition to a mid-century net zero emissions goals.

The institutional investors are also urging governments to implement a host of climate policies that deliver on these goals and incentivise private investment in zero emission solutions in the short term. Policy proposals put forward by the group include ending fossil fuel subsidies, avoiding new investment in carbon-intensive infrastructure, phasing out coal-based electricity generation, and establishing just transition plans that set out how decarbonisation will benefit workers and communities, they said.

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The statement also calls for all governments to implement mandatory climate risk disclosure requirements aligned with the Task Force on Climate-related Financial Disclosure recommendations – a proposal backed just last week by G7 Finance Ministers – and for all economic recovery plans rolled out in the wake of the pandemic to support the transition to net zero emissions.

Michelle Scrimgeour, CEO of Legal & General Investment Management, a signatory to today’s appeal emphasised that investors had to play a crucial role in delivering a climate-safe future.

“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,” she said. “As co-chair of the UK government’s COP26 Business Leaders Group, 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.”

The investor call to action is published just a day after more than 350 civil society organisations from 58 countries called on G7 leaders to stop financing fossil fuel infrastructure and deliver on their climate finance commitment to countries in the ‘Global South’.

The open letter, which has been signed by 350.org, Friends of the Earth in England, Wales, and Northern Ireland, Climate Action Network UK, Oil Change International, Global Witness, Greenpeace International, and Global Justice Now, also calls on industrialised nations to cancel debt payments to Global South countries grappling with escalating climate impacts and Covid-19, end fossil fuel development in their own countries, and support mechanisms that will speed up a just transition, both domestically and in developing countries.

“This [G7 Leaders] summit should be the final G7 where discussion of fossil fuel finance is even needed,” said Elizabeth Bast, executive director of Oil Change International. “With voices of economists, scientists, global civil society and even the International Energy Agency calling for an end to financing of new fossil fuels, it is time for the G7 to step up. Their leadership on shifting finance entirely out of fossil fuels is long overdue, and our climate and communities are suffering the consequences.”

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