Rapid government action is needed to support climate-related investments by the private sector, according to the Investor Agenda group
A group of 532 investors from around the world have signed a statement calling for governments to take faster action to put policies in place to support the scaling up of private sector investments directed at mitigating global climate warming and its impacts.
The investors, which have an estimated $39 trillion in assets under management between them, are asking for wider implementation of climate disclosure regulation of the finance sector, in addition to climate regulation of companies. They are also requesting action on policy areas including methane pollution, climate adaptation and resilience, and scaling up climate finance for developing countries.
The 2022 Global Investor Statement to Governments on the Climate Crisis is coordinated by the Investor Agenda group, which includes the Asia Investor Group on Climate Change (AIGCC), CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change, Principles for Responsible Investment and UNEP Finance Initiative.
The statement – the latest in a series of calls for climate action published by the group over recent years – is also signed by a plethora of major investment institutions, pension funds, specialist investment boutiques and non-governmental organisations, among others.
Rebecca Mikula-Wright, CEO of the AIGCC and Investor Group on Climate Change (IGCC) is a member of the Investor Agenda steering group. She described the statement as a powerful call from investors for governments to strengthen, broaden and accelerate their climate policies.
“To keep 1.5°C in reach, protecting their citizens and economies, governments must adopt credible targets now, starting by setting deadlines for phasing out fossil fuels, supporting clean energy, and incentivizing decarbonization across economies. We are making this call now, knowing that a rapid, orderly and just transition is essential for the prosperity and economic stability that investors, citizens and governments all want to see,” Mikula-Wright said.
The statement reflects the frustration of many investors that, while they are being asked to direct more funding towards climate-related investments, and are doing so, the targets and regulatory framework needed to enable them to manage their exposure to climate risks and scale up their investments remain inadequate or incomplete in many countries.
Although collaboration from many stakeholders is required, governments and policy makers have the most important role to play in decarbonising the global economy, according to Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change (IIGCC) CEO and a member of the steering committee,
“Critically, by setting ambitious net zero targets that are backed up by supportive and clear domestic policies across the real economy, governments can act as a powerful catalyst to facilitate the investment and shift in capital allocation necessary to make net zero a reality,” she said.
Domestic and global goals
Besides strengthening climate disclosures across the financial system, the statement calls on governments to ensure their climate change targets are aligned with the goal of limiting global temperature rise to 1.5°C and that they implement domestic policies to match that target.
They also ask for support to enable effective implementation of the Global Methane Pledge to reduce emissions of that potent greenhouse gas by at least 30% from 2020 levels by 2030. The provision of climate finance from the public and the private sector for climate adaptation and resilience mitigation in developing countries also needs to be scaled up, the statement says.
Jane Ambachtsheer, head of global sustainability at BNP Paribas Asset Management (BNPPAM) recently told Impact Investor that the financial sector needed to make more use of its influence with policymakers to speed up climate change policy implementation and that initiatives such as the Global Investor Statement – to which BNPPAM is a signatory – were an important part of that process.
“Think of all the thousands of well-paid lobbyists lobbying against doing anything about climate change. Who’s lobbying on the other side? It can and should be investors,” she said.