As government representatives continue negotiations to hammer out a global climate deal at COP21 in Paris, institutional investors assemble to highlight their contributions in a number of areas, reinforcing calls for robust Paris climate agreement to enable rapid scale up of investment in low-carbon transition.
The last week has delivered significant milestones in four key areas of investor activity:
More than 400 investors with a collective US$ 24 trillion in assets under management have now signed the Global Investor Statement on Climate Change – a call to action setting out the steps investors can and will take to address climate change alongside the six specific policy responses from governments that would allow investor actions, including low-carbon investments, to be scaled up even further.
More than 115 investors have pledged to measure and disclose their carbon footprint via the Montréal Pledge.
The Portfolio Decarbonisation Coalition’s US$100 billion target has been exceeded by $130 billion as 23 investors now work to reduce their financed emissions.
More than $50 billion in low carbon investments are now registered on the Low Carbon Investment Registry.
Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change said, “Investors know they have a unique role in enabling both the pace and scale of investment required to realise Government ambitions around the world to curb runaway climate change. They also know that a global deal will never become easier in the future so they have come to Paris calling in the strongest possible terms for a long term emissions reduction goal to deliver the 2°C objective.”
“Investors are speaking with a clear voice: we need a strong agreement that will put us on a path that avoids catastrophic climate change,” said Mindy Lubber, president of Ceres and director of the $13 trillion Investor Network on Climate Risk (INCR). “A successful COP21 will unleash investment and innovation in clean energy at the scale that is needed to limit global warming and protect the global economy.”
“Trillions of dollars in capital will move out of some industries and into others as the world economy pivots around the need to limit global warming to two degrees Celsius. Momentum is building and investors are alive to the opportunities. Having a clear transitional pathway with regular review and ratchet milestones will accelerate the deployment of capital into low carbon investment”, added Emma Herd, Chief Executive of the Investor Group on Climate Change, a collaboration of over 60 Australian and New Zealand institutional investors, representing over $1 trillion AUM.
“We know that private climate finance is vital to ensure that developing countries are able to successfully transition to a low carbon environment,” said Fiona Reynolds, managing director of the PRI, “and to demonstrate that wealthier nations are honouring the commitments they made back in 2009. The good news is that a recent study by the Climate Policy Initiative showed that global climate finance hit a record-breaking $391bn in 2014, thanks to a surge in private investment in renewable energy.”
Eric Usher, Director (acting) UNEP FI added, “The fact that the Portfolio Decarbonisation Coalition has more than doubled its $100bn goal is indicative of the transformation of investor action on climate change. Investor leadership is a starting point but it is our hope this will send a clear message to the negotiators in Paris that we need a strong and ambitious agreement to keep us on a 2 degree trajectory.”
Paul Simpson, CEO, CDP said: “Investors have sent a clear message that climate change matters to them – it is already affecting company valuations and investors are responding by assessing the risks and opportunities in their portfolios. Better disclosure from companies is vital to enable a proper risk assessment and investors have shown that they are already reallocating capital away from those companies who are not responding to their concerns.”