Hundreds of global investors commit to bolster climate strategies

A coalition of almost 400 investors with $23trn in collective assets has pledged to step up its climate action plans in a bid to help the global finance sector meet the aims of the Paris Agreement.

The 392 asset managers announced on Wednesday (12 September) that they have committed to follow the principles of the Investor Agenda, which provides a blueprint for climate action across the fields of investment, corporate engagement, investor disclosure and policy advocacy.

Updated at the Global Climate Action Summit in San Francisco by the UN Principles for Responsible Investment arm, the document advises investors on how best to directly report actions they are taking and scale-up their commitment to act.

The United Nations Framework Convention on Climate Change’s (UNFCCC) executive secretary Patricia Espinosa welcomed the new commitments, claiming that they prove the investment sector is “showing great leadership to promote climate action in multiple fronts”.

“[Investor’s] efforts to meet the shortfall in the financial resources required to deliver the Paris Agreement goals, and further building on engagement with high-emitting sectors are a valuable contribution,” she said.

“Yet we believe many more opportunities exist. The Investor Agenda offers a clear path to scale-up investor action, which is essential to meet the needs in every region of the world to address climate change. It gives investors multiple opportunities to continue to demonstrate their willingness to become part of the transformation that will lead us to a cleaner, greener and sustainable future for all.”

To date, the Investor Agenda has highlighted the moves which 120 investors have taken to pursue investment into low-carbon and climate resilient portfolios, funds or assets. Among these are the 15 insurance companies which Unfriend Coal recently claimed had collectively divested £15bn from fossil fuels since 2016.

It also showcases that 650 investors with $87trn in collective assets are now disclosing their societal and environmental impacts through CDP, while 296 have committed to reduce emissions in line with the Paris Agreement’s 2C target through the Climate Action 100+ initiative.

Additionally, the document notes that more than 60 investors have committed to report in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Investment drive

The investment sector has made a number of significant moves to champion sustainable finance in recent months. For example, Legal and General Investment Management (LGIM), APG and Robeco recently joined more than 70 other corporates in pledging to act to prevent deforestation in Brazil’s tropical savanna.

Moreover, banking and insurance giants are increasingly announcing plans to make their portfolios more sustainable by divesting from coal companies and those in other carbon-intensive sectors. LGIM last month announced that it would divest from a host of companies it believes are showing “persistent inaction” on addressing climate risks.

Nonetheless, concerns about the lack of climate action in the wider financial sector continue to persist, with two separate reports this week claiming that the reinsurance and pension fund sectors are failing to progress towards key climate goals by continuing to invest in coal projects over low-carbon alternatives.

Sarah George

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