Give us sector-specific guidance on net-zero transition, investment giants tell G7 nations

A group of investors with £8.5trn of assets under management has called on G7 nations to introduce new climate disclosure and action mandates for big businesses - and to provide more detail on how their long-term climate goals will be delivered.

Give us sector-specific guidance on net-zero transition, investment giants tell G7 nations

Certain firms will be required to disclose in line with TCFD recommendations in the UK from 2022

The call to action is being made by UK-based trade body the Investment Association (IA) ahead of the G7 meeting in Cornwall this month. Climate action is set to be one of the summit’s main priorities, along with the response to the Covid-19 pandemic.

In an open letter sent to Ministers across the G7 this week, the IA is calling for new rules that would mandate big businesses to disclose their exposure to climate risks in a unified manner. The Task Force on Climate-Related Disclosures (TCFD) framework is currently the world’s most popular and nations including the UK have outlined plans for mandatory TCFD reporting. According to the IA, scaling this requirement is vital for keeping tabs on international firms.

Also detailed in the IA’s letter is a request for more clarity on the sector-specific, short-term and mid-term activities needed to deliver against long-term climate targets. Some 70% of global GDP is now covered by net-zero targets but, the letter states, many end-user businesses and their investors are unsure of the steps they should take to align with these long-term visions. This also means investors find it harder to understand which firms are net-zero-aligned or not and, for those that are not, whether engagement or divestment is a better course of action.

The UK Government’s plan for addressing this concern – which has been raised by other investor groups, business coalitions, think tanks and NGOs – is developing a net-zero roadmap ahead of COP26; green groups have been pressing for more clarity on a publication timeline.

The IA represents firms with some £8.5trn in assets under management collectively. The majority of members, with assets totalling some £5trn, have pledged to reach net-zero financed emissions by 2050 or sooner. According to the letter, the proposed legislation and regulation changes could help them deliver on this aim and prompt others in the sector to follow suit.

IA members include Allianz Global Investors, M&G Investments, Jupiter Asset Managements, Aviva Investors, Schroders and Legal & General.

“The meeting of the G7 is a prime opportunity for the world’s largest economies to take a coordinated, global approach to tackling climate change,” IA chief executive Chris Cummings said.

“As an industry which invests in companies around the world on behalf of both UK and overseas savers and investors, investment managers have a vital role to play in the shift to a more sustainable global economy.

“Ensuring high-quality and comparable data on the risks that companies face from climate change is key to achieving this and meeting the net-zero targets.”

Summit updates

The news comes shortly after it was confirmed that the G7 summit for 2021 will comply with internationally recognised standards for carbon neutrality.

Groups across the green economy have urged the UK Government to ensure that the summit’s outcomes for the environment mirror this commitment, proving that the hosts are not greenwashing. The Summit is a precursor to the 15th Biodiversity COP and to COP26 in Glasgow this November.

The B7 group, which comprises trade bodies including CBI, BusinessEurope and the Chambers of Commerce for the US and Canada, recently wrote to world leaders with recommendations to ensure that the summit prioritises the international response to the climate and nature crises.

45-minute masterclass: TCFD implementation for your business

With the TCFD  rapidly rising up the corporate agenda, edie is hosting a masterclass-style webinar session that will provide key information, insights and inspiration when it comes to effectively implementing the TCFD recommendations within your organisation.

The 45-minute session, hosted in association with Inspired Energy, is taking place on Wednesday 23 June at 1pm BST. It is free to attend. 

For a full agenda and to register, click here. 

Sarah George

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