Finance

Investors with $41tn urge G7 to ‘accelerate action’ on climate crisis

Fidelity International, State Street, Amundi and Schroders are among a group of more than 400 influential investors that have called on the world’s most powerful nations to “raise ambition and accelerate action” to tackle the climate crisis.

The group of 457 investors, which oversees more than $41tn in assets, has issued a statement to the G7 — Canada, France, Germany, Italy, Japan, the UK and US — demanding urgent action to reduce greenhouse emissions and limit global warming to 1.5°C, as set out by the Paris Agreement in December 2015.

The call to action from investors comes as G7 leaders meet this week at a summit in Cornwall.

“To achieve this common goal, we must work together to reduce global net carbon dioxide emissions by 45 percent from 2010 levels by 2030, with a dramatic reduction of all greenhouse gas emissions essential for reaching net-zero emissions by 2050 or sooner,” the investors said in the statement issued on 10 June.

“Key to this is ensuring government leaders support sustainable Covid 19 economic recovery efforts consistent with net-zero emissions.”

The cohort of investors is making its call ahead of the 26th UN Climate Change Conference of the Parties, taking place in Glasgow during November. The group wants governments to “significantly strengthen” their national targets for 2030 and to ensure they can hit net-zero emissions by 2050 or sooner.

“While we recognize the differentiated responsibilities and respective capabilities of countries, we believe that those who set ambitious targets in line with achieving net-zero emissions, and implement consistent national climate policies in the short-to-medium term, will become increasingly attractive investment destinations,” the investors said.

“Countries that fail to do so will find themselves at a competitive disadvantage.”

The group of investors says that in order to be able to allocate trillions of dollars needed to support the transition to net-zero, the gap needed to be closed between the commitments made by national governments and the reduction in emissions needed to limit global temperature rises in line with the Paris Agreement.

“In addition, as owners of (or those representing owners of) companies, we need access to adequate information on how these companies are assessing and managing the risks and opportunities presented by climate change. Government policy has a role to play in increasing our access to and affirmative disclosure of such information,” the investor group said.

Among five recommendations outlined by the group is a call for governments to remove fossil fuel subsidies and to phase out thermal coal-based electricity generation by set deadlines.

They also want the implementation of mandatory climate risk disclosure requirements aligned with the Task Force on Climate-related Financial Disclosures recommendations, to ensure investors have comprehensive disclosures that are consistent and comparable.

“Full implementation of the Paris Agreement will create significant investment opportunities in clean technologies, green infrastructure and other assets, products and services needed in this new economy,” the investor group said.

“In turn, investors can use capital allocation and stewardship to support sustainable activities that generate jobs and economic growth, transition away from carbon-intensive activities and increase resilience. We encourage governments to engage closely with investors to make sure these opportunities are fully realized.”

Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change, added: “The world’s leading investors are making it crystal clear they expect governments to show they are committed to tackling the climate crisis.

“Those that fall short will increasingly be left behind as the race to a cleaner future gathers pace.”

Investors have begun wielding significant voting power at companies where they have serious concerns over how climate risks are being managed.

ExxonMobil suffered a bruising shareholder revolt at its annual general meeting on 26 May, after activist hedge fund Engine No.1 won three board seats following a five-month campaign against the US oil giant.
The hedge fund, which was only established in December 2020, had called on ExxonMobil to focus on investment in clean energy sources.

Meanwhile, more than 60% of Chevron shareholders backed a proposal on 26 May forcing the second largest oil company in the US to cut the carbon emissions from its products.

A Netherlands court also ordered Royal Dutch Shell to cut its carbon emissions by 45% by 2030 compared to 2019 levels following a case brought by Friends of the Earth and 17,000 Dutch citizens.

In a LinkedIn post on 9 June, Shell CEO Ben van Beurden said he was surprised by the 26 May court ruling, which it intends to appeal.

“Some two weeks on, I still feel disappointed that Shell is being singled out by a ruling that I believe does not help reduce global CO2 emissions,” van Beurden wrote.

“But, along with my colleagues, I feel something else: a determination to rise to the challenge.”

He added: “We will seek ways to reduce emissions even further in a way that remains purposeful and profitable.”

Corrections and amplifications: The headline on this article has been amended to correct the amount of assets overseen by investors to $41bn, not $47tn as previously stated.

To contact the author of this story with feedback or news, email David Ricketts

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