Investors push for greater climate ambition: warn of capital flight

A group of 733 investors representing more than $US52 trillion in assets has put pressure on governments to scale up their 2030 targets.

The towers of the coal-fired Kelvin Power Station are seen in Kempton Park, Ekurhuleni, in South Africa on October 13, 2021. Picture: Michele Spatari / AFP

More than 700 institutional investors from across the globe have signed a push ahead of the Glasgow summit to reduce emissions by 45 per cent on 2010 levels by the end of the decade to help achieve carbon neutrality by mid-century.

The statement from the group of 733 investors representing more than $US52 trillion in assets under management puts pressure on governments to scale up the ambition of their 2030 targets ahead of COP26 as part of the Covid-19 economic recovery.

Australia is standing by its pledge to cut pollution by 26-28 per cent on 2005 levels by 2030 despite Scott Morrison’s climate plan containing forecasts showing the nation could reduce its emissions by up to 35 per cent.

The statement from the global investors calls on governments to overhaul their domestic policies through “robust carbon pricing, the removal of fossil fuel subsidies by set deadlines (and) the phase out of thermal coal-based electricity generation by set deadlines in line with credible 1.5-degrees Celsius temperature pathways.”

The Global Investor Statement to Governments on the Climate Crisis released on Wednesday also calls on governments to boycott new carbon-intensive infrastructure and to implement “just transition plans” for workers and communities in exposed industries.

“If we do not meet this challenge and change course immediately, the world could heat in excess of 3-degrees Celsius this century,” the statement says. “As the world prepares to gather for the 26th United Nations Climate Change Conference of the Parties (COP26), we encourage all countries to significantly strengthen their Nationally Determined Contributions (NDCs) for 2030 and to ensure a planned transition to net-zero emissions by 2050 or sooner.”

“Our ability to properly allocate the trillions of dollars needed to support the net-zero transition is limited by the ambition gap between current government commitments (as set out in NDCs) and the emissions reductions needed to limit global average temperature rise to 1.5-degrees Celsius,” the statement reads.

Signatories to the statement include some of the largest investors in the world including State Street Global Advisers,

Other objectives addressed in the statement include mandatory climate risk disclosure requirements – an obligation for companies to release information to investors about their exposure to climate risk and opportunities.

The push comes after the United Nations Environment Program (UNEP) overnight released a report showing that updated NDCs only took 7.5 per cent off predicted 2030 emissions, while 55 per cent was needed to meet the 1.5-degrees Celsius Paris goal.

The report suggested that the world was on track for a temperature rise this century of at least 2.7-degrees Celsius, but that net zero pledges could shave off another 0.5-degrees.

UNEP executive director Inger Andersen said that the world had “eight years to almost halve greenhouse gas emissions: eight years to make the plans, put in place the policies, implement them and ultimately deliver the cuts. The clock is ticking loudly.”

The incoming COP26 President, Alok Sharma said the report showed progress, “but not enough.”

“That is why we especially need the biggest emitters, the G20 nations, to come forward with stronger commitments to 2030 if we are to keep 1.5-degrees in reach over this critical decade.”

The report said that the world needed to take an additional 28 gigatonnes of CO2 equivalent off annual emissions, over and above what is promised in the updated NDCs and other 2030 commitments.