INVESTORS CALL ON G20 NATIONS TO RATIFY PARIS AGREEMENT SWIFTLY AND EXPAND LOW CARBON & GREEN INVESTMENT
As leaders of the world’s largest economies prepare to attend the upcoming G20 meeting in Hangzhou, China, 130 investors (with over $13 Trillion AUM) from a coalition of six organisations(1) have written to the G20 heads of state urging them to ratify the Paris Climate Agreement this year and call on G20 nations to double global investment in clean energy, tighten up climate disclosure mandates, develop carbon pricing and phase out fossil fuel subsidies.
“The Paris Agreement provides a clear signal to investors that the transition to the low-carbon, clean energy economy is inevitable and already underway,” said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change (IIGCC). “Governments must ratify the Paris agreement swiftly and have a responsibility to implement policies that drive better disclosure of climate risk, curb fossil fuel subsidies and put in place strong pricing signals sufficient to catalyze the significant private sector investment in low carbon solutions required to realize the agreement’s goals.“
Investors also called on the G20 leaders to prioritize rulemaking by national financial regulators to require stronger disclosure of ‘material’ climate risks.
“Financial regulators, like the SEC, should step up attention to improve the quality of corporate climate disclosures, which are broadly lagging when considering wide-ranging and escalating climate risks,” said Mindy Lubber, President of the US NGO Ceres and Director of the Investor Network on Climate Risk (INCR). “Improving the quality of climate-related financial disclosure, and aligning it between different jurisdictions, is vital to spurring broad capital market action on this issue.”
“In the wake of the Paris Agreement, we have already seen positive changes, but the swifter nations act to ratify the Agreement, the better positioned we will be,” said New York State Comptroller Thomas P. DiNapoli. “There is no debate that the future global economy will be a lower carbon economy. From an investor perspective, the first step must be greater climate risk disclosure to help us fulfill the promise of Paris.”
Lubber said the investor groups are fully engaged with the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD). We applaud this initiative and encourage G20 nations to consider the TCFD’s forthcoming recommendations as key inputs to their national disclosure rules.
Investors urge the G20 to support a doubling of global investment in clean energy by 2020, as called for by the UN Secretary-General(2) in January 2016 at the Investor Summit on Climate Risk at the UN.
“While the private sector can provide much of this vital investment, policy signals must also support climate goals in the clearest possible manner,” said Emma Herd, CEO of the Investor Group on Climate Change (IGCC). “Maintaining strong growth in clean energy investment is key to tackling climate change. We strongly encourage G20 nations to ratify Paris and help drive trillions of dollars into new clean energy investment opportunities.”
The letter also welcomes the work of the G20 Green Finance Study Group, which aims to enhance the contribution of institutional investors to the greening of mainstream financial flows. Fiona Reynolds, Managing Director of PRI said, “Investors signing this letter understand that the study group’s conclusions will be presented at the G20 Leaders’ Summit in 2016. We therefore ask for the green finance agenda to be taken forward by the German and other future G20 presidencies. In order for green financing to reach its potential, the G20 must encourage the public and private sectors to work more closely together on issues such as stronger environmental protection and implementation of regulation. Incentives and policy frameworks must also be in place so that private capital flows more freely into green investments.”
Commenting further, Paul Simpson, CEO of CDP added: “investors also highlight the recommendations made to world leaders a year ago in the 2015 Global Investor Statement on Climate Change(3) and renew their calls for the G20 to support both the development of carbon pricing and the prompt phase-out of fossil fuel subsidies.”
Finally, investors also use the letter to urge the G20 to both prioritise implementation of their nationally determined contributions and to prepare to strengthen them with the goal of ensuring all G20 nations meet their commitments and raise their climate ambition during 2018 to achieve the Paris Agreement’s goals.
(1) The six organisations co-sponsoring the letter are: IIGCC – Europe’s Institutional Investors Group on Climate Change; Ceres/INCR - the North American Investor Network on Climate Risk; IGCC – the Australia/New Zealand Investor Group on Climate Change; AIGCC – the Asia Investor Group on Climate Change; CDP and PRI. Together these groups represent over 400 long-term investors with more than $24 trillion of assets under management. For more information on initiatives led or sponsored by these groups see the Global Investor Coalition on Climate Change (globalinvestorcoalition.org) and the Investor Platform for Climate Actions (www.investorsonclimatechange.org)
(2) Remarks from Ban Ki Moon in January 2016 can be viewed here.
(3) Recommendations for governments set out in the 2015 Global Investor Statement on Climate Change included a call for the introduction of stable, reliable and economically meaningful carbon pricing that helps redirect investment commensurate with the scale of the climate change challenge.
The Institutional Investors Group on Climate Change (IIGCC) - the investor voice on climate solutions in Europe - is a collaborative forum with 125 members, mainly mainstream investors (from 9 countries), with over €13 trillion assets under management that offer investors a common voice to encourage public policies, investment practices and corporate behaviour which address long-term risks and opportunities associated with climate change. See www.iigcc.org or follow @iigccnews.
The North America-based Investor Network on Climate Risk is a network of more than 120 institutional investors representing more than $14 trillion in assets committed to addressing climate change and other key sustainability risks, while building low-carbon investment opportunities. INCR is a project of Ceres, a non-profit group mobilising many of the world’s largest investors and companies to take stronger action on climate change, water scarcity and other sustainability challenges. See www.ceres..org/incr and @INCRnews
The Investor Group on Climate Change (IGCC) is a collaboration of Australian and New Zealand institutional investors with over $1 trillion in assets under management, focused on the impact that climate change has on the financial value of investments. IGCC aims to encourage government policies and investment practices that address the risks and opportunities of climate change, for the ultimate benefit of superannuants and unit holders. See www.igcc.org.au and @IGCC_Update
The Asia Investor Group on Climate Change (AIGCC) is an initiative to create awareness among Asia’s asset owners and financial institutions about the risks and opportunities associated with climate change and low carbon investing. AIGCC provides capacity for investors to share best practice and to collaborate on investment activity, credit analysis, risk management, engagement and policy. AIGCC represents the Asian investor perspective in evolving global discussions on climate change and the transition to a greener economy. See www.aigcc.net and @AIGCC_Update
CDP works to transform the way the world does business to prevent dangerous climate change and protect our natural resources by using the power of measurement and information disclosure to improve the management of environmental risk. CDP has incentivised thousands of companies and cities across the world’s largest economies to measure and disclose their environmental information. CDP holds the most comprehensive collection globally of primary corporate environmental data. Through its global system companies, investors and cities are better able to mitigate risk, capitalize on opportunities and make investment decisions that drive action towards a more sustainable world. See www.cdp.net and @CDP
PRI is the world’s leading proponent of responsible investment. It works to understand the investment implications of environmental, social and governance (ESG) factors and to support its international network of investor signatories in integrating these factors into their investment and ownership decisions. PRI acts in the long-term interests of its signatories, of the financial markets and economies in which they operate and ultimately of the environment and society as a whole. The Principles for Responsible Investment have more than 1,500 signatories, managing over US$60 trillion. See www.unpri.org and @pri_news