World leaders must do their bit in climate change fight, say investors

Institutional investors active in the fight against climate change have turned the spotlight on governments, demanding world leaders to do their part “with the utmost urgency”.

The call to action was issued ahead of the G7 summit in Canada later this week. By Friday, almost 300 investors with $26trn (€22trn) in assets under management had put their name to a statement delivered to the United Nations Framework Convention on Climate Change and G7 government leaders.

It forms part of a new stage in investors’ involvement in the campaign to cap further greenhouse gas emissions, with emphasis increasingly being placed on the need for concrete action and targets to make the low carbon transition a reality, rather than just disclosure about financial implications.

The focus has been on companies, with a shareholder resolution having recently focused attention on Royal Dutch Shell in particular, but with today’s statement investors have sought to put pressure on politicians.

“The global shift to clean energy is underway, but much more needs to be done by governments to accelerate the low carbon transition and to improve the resilience of our economy, society and the financial system to climate risks,” they wrote in the joint statement.

“We are concerned that the implementation of the Paris Agreement is currently falling short of the agreed goal of ‘holding the increase in the global average temperature to well below two degrees Celsius above pre-industrial levels’,” they added.

Investors were continuing to make “significant” investments in the low carbon transition, incorporating climate change scenarios and climate risk management strategies into their investment processes, and engaging with the largest greenhouse gas emitters, but governments needed to act too, according to the statement.

“It is vital for our long-term planning and asset allocation decisions that governments work closely with investors to incorporate Paris-aligned climate scenarios into their policy frameworks and energy transition pathways,” it read.

Emma Herd, CEO of the Investor Group on Climate Change, one of the campaign groups organising the statement, said: “Investors could do even more if governments delivered the policies required to effectively manage climate risk and accelerate investment in low carbon solutions.”

Investors signing the statement asked world leaders to take 12 actions, grouped under the headings of “achieve the goals of the Paris Agreement”, “accelerate private sector investment into the low carbon transition”, and “commit to improve climate-related financial reporting”.

The investors’ demands included that government leaders this year formulate and communicate long-term emission reduction strategies, put a meaningful price on carbon, phase out fossil fuel subsidies and thermal power worldwide by set deadlines, and request international standard-setting bodies to incorporate the recommendations from the Task Force on Climate-related Financial Disclosures into their standards.