'Set legally binding net-zero target now', investors urge EU leaders
A coalition of more than 40 investors collectively representing upwards of €6trn of assets under management has written to all EU heads of state, urging them to set legislation in line with net-zero by 2050 or sooner.
In an open letter sent to the European Commission and to the heads of state of each Member state today (6 December), the group, called the Institutional Investors Group on Climate Change (IIGC), urges readers to set new climate legislation in line with the IPCC’s findings on global warming. In its landmark report last year, the body concluded that limiting the global temperature increase to 1.5C would require global carbon emissions to reach net-zero by mid-century.
The IIGC’s letter states that the “necessity and benefits of the adoption of a [net-zero] target are clear”, claiming that the creation of a low-carbon economy across the EU would deliver a 2% increase in GDP across Member States by 2050 and spur the creation of 2.1 million new jobs.
While admitting that net-zero will be “challenging to attain” within this timeline, the letter states: “The changes to economies across the EU will be significant, but the benefits outlined above unmistakably outweigh the impacts of insufficient action.
“The science – and the market fundamentals – are clear: the costs of inaction will be catastrophic. The solution is in well-designed policies that allow private finance to flow, supporting public efforts and exploiting huge investment opportunities.”
Signatories to the letter include representatives from the likes of Allianz, Legal and General Investment Management (LGIM), the Environment Agency Pension Fund and CBRE Global Investors.
The publication of the letter has been timed not only to coincide with the UN’s COP25 summit in Madrid, but ahead of the next EU leaders summit in Brussels next week.
The latter of these events will be the first since European Commission President-elect Ursula von der Leyen took up the post. She has vowed to make the introduction of a Green New Deal the “hallmark” of her time in post and to make Europe the world’s first climate-neutral continent. The Green New Deal is expected to contain a 2050 net-zero target for the EU, bolstered by an objective to cut emissions by 55% by 2030, against a 1990 baseline. The EU’s current 2030 target s a 40% reduction within the same parameters.
Moving faster than bloc-wide policies, several finance firms have set their own net-zero policies. At the UN's last climate summit, in New York this autumn, investors collectively controlling $2.4trn of assets pledged to make their portfolios carbon-neutral by 2050. A coalition of 130 banks, representing one-third of the worldwide banking sector, have also set 1.5C-aligned commitments.