Investors warn countries to fix climate or miss out on trillions

Investors with 37 per cent of all global assets under management warn governments they will bypass countries which don’t take serious action on climate change.

Hesta CEO Debby Blakey.

Investors managing $US41 trillion ($53 trillion) in assets have warned governments around the world they will miss out on trillions of dollars in investment if they “aim too low and move too slow” on climate policy.

The 2021 Global Investor Statement brings together investors with the biggest hoard of assets under management to support a statement to governments on climate change since the first statement in 2009.

Developed by the seven founding partners of The Investor Agenda, the statement says that governments which 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”.

“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,” it says.

One of the seven founders is the Investor Group on Climate Change, a collaboration of Australian and New Zealand investors with $2 trillion in assets under management.

Debby Blakey, chief executive of the $60bn industry fund HESTA for health workers, said in a statement that Australia had a huge opportunity to attract global investment and draw on a pool of more than $3 trillion in super savings to power a low-carbon transition.

“But investors need greater certainty provided by stable, long-term policy settings,” Ms Blakey said.

“If we can get a clear, timely path to net-zero, then super funds like HESTA would have a significant appetite to invest more in domestic renewable infrastructure and innovative cleantech opportunities.”

The $US41 trillion in combined assets under management of the 457 signatories represents about 37 per cent of all global assets under management.

It includes 51 signatory investors each managing over $200bn in assets, and comes as the world’s largest asset managers are increasingly pledging to achieve net-zero emissions across their portfolios by 2050 and set interim emissions reduction targets.

The 2021 statement asks for governments to raise their climate ambition and implement meaningful policies, calling for five priority measures to be undertaken before COP26 – the 26th United Nations climate change conference to be held in November in Glasgow.

Governments, it says, should strengthen their contributions to limiting global warming to 1.5 degrees, and commit to a mid-century, net-zero emissions target, with ambitious interim targets which include decarbonisation road maps for each carbon-intensive sector.

The third priority should be domestic policies to achieve the targets, incentivise private investment in zero-emissions solutions, and ensure ambitious action before 2030.

Fossil fuel subsidies should be removed by set deadlines in line with credible pathways to limit global warming to 1.5 degrees, along with the phasing out of electricity generation through thermal coal, avoidance of new carbon-intensive infrastructure, and development of just transition plans for affected workers and communities.

Fourth, Covid-19 economic recovery plans should support the transition to net-zero emissions and enhance resilience, and finally, countries should implement mandatory climate-risk disclosure requirements, aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

The Investor Agenda says many nations already have improved their climate policies or made pledges to improve them, including 2030 emissions reduction targets.

“However, significant climate policy and finance gaps remain in almost all nations, and the world is currently not on a trajectory to meet the objectives of the Paris Agreement, underscoring the need for further ambition,” it says.