$39trn coalition urges ‘more ambitious’ climate action pre-COP27

Investors representing $39trn in assets under management have called on governments to align their Nationally Determined Contributions (NDCs) with the goal of limiting the global temperature rise to 1.5°C by 2030 and demanded stronger climate disclosures across the financial system.

In the 2022 Global Investor Statement to Governments on the Climate Crisis, the seven founding partners of the Investor Agenda and 532 investor signatories said that if governments’ targets are not aligned, then they “must enhance and strengthen their 2030 targets before COP27, taking into account different national circumstances”.

These signatories include a host of asset management firms and pension funds.

The 27th United Nations Climate Change Conference (COP27) is due to take place in Egypt from 6 to 18 November 2022 and will build on outcomes agreed at COP26 in Glasgow last November.

The Investor Agenda, which describes itself as a “common leadership agenda on the climate crisis”, stated that COP27 will provide an opportunity for governments to “raise their ambition” and enact the specific policies needed to enable “large-scale zero-emissions, climate-resilient investments”.

David Atkin, CEO of Principles for Responsible Investment (PRI), one of the Investor Agenda’s founding partners, said: “Once again, investors are issuing a clear call to governments on the urgent need for public policy to reflect and support investor action. We know that more ambitious action on climate is needed, a fact compounded by increasing geopolitical tension and the devastation caused by intensifying extreme weather events.”

Atkin added that the need for a “bold, effective and coordinated policy response on climate” had never been more pressing.

In the organisation’s statement this will include equating climate action with fiduciary duty.

Pushing for change within eight years

The Investor Agenda’s statement urged governments to “take early action” when it comes to aligning their 2030 greenhouse gas emissions with the target to limit global warming to a 1.5°C rise by 2030, citing the Intergovernmental Panel on Climate Change’s (IPCC’s) sixth assessment report, in which it warned global warming could exceed that by as early as 2040.

The push for 2030 will require an acceleration of net-zero timelines, with many companies and governments using 2040 or 2050 as target years.

The Investor Agenda said this will require governments to accelerate the development and deployment of technologies that enable the transition towards a net-zero emissions economy, including “rapidly scaling up” the rollout of low-carbon energy systems, electrification, flexibility, and storage.

It also called on governments to implement “robust” carbon pricing mechanisms that rise over time, and with “appropriate coverage and adequate social considerations”, and to issue a deadline for transitioning energy away from fossil fuels and to end all deforestation globally.

Strengthened climate disclosures

One of the Investor Agenda’s other demands ahead of COP27 is the “strengthening” of climate disclosures across the financial system.

It said this could be achieved through mandatory reporting aligned to the recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD) and backed by a “robust” global taxonomy.

In addition, it will require the public disclosure of 1.5°C “pathway-aligned, science-based, independently verifiable climate transition plans” both for listed and large non-listed companies, asset managers and regulated asset owners.

This would be a crucial departure from current voluntary compliance with TCFD reporting.

A commitment to the Global Methane Pledge has also been urged by the Investor Agenda, which would aim to reduce methane emissions by at least 30% by 2040.