Be bolder with climate policies, 70 CEOs and investors worth $41trn tell world leaders
An alliance of more than 70 chief executives has written to world leaders in support of "bold and courageous commitments, policies and actions" on tackling the climate crisis, on the same day that a similar call to action has been made by investors representing trillions of dollars of assets.
The open letter from the chief executives, convened by the World Economic Forum’s (WEF) Alliance of CEO Climate Leaders, includes signatories from the world’s largest businesses in all major sectors. Signatories represent the likes of H&M Group, Ikea, Mahindra Group, Nestle and Unilever.
It calls on world leaders to “help supercharge the net-zero climate and resilience transition” ahead of COP26 in five months’ time, arguing that businesses are ready and willing to change in line with stricter Nationally Determined Contributions (NDCs) to the Paris Agreement and tighter carbon budgets, among other policy changes.
Top-line actions recommended in the letter are for nations to set net-zero targets with a deadline of 2050 at the latest; to update NDCs in line with the Paris Agreement’s 1.5C target, as requested by COP26 hosts in the UK; and to prepare for the delivery of a commitment to provide developing nations with $100bn of climate finance annually. A recent Oxfam report stated that the G7’s current commitments would deliver $36bn by 2025, of which less than $10bn would be for projects and initiatives on climate adaptation.
The letter goes on to state that these top-line targets must be supported with clear policy changes, particularly in high-emitting and hard-to-abate sectors, and in the finance sector, which, of course, interacts with all areas of the economy. These changes, it argues, must support adaptation and resilience as well as the low-carbon transition.
It states that the business signatories would offer their support to policy changes such as higher carbon pricing and more international collaboration on carbon markets. The UK and China notably both launched their first standalone Emissions Trading Systems (ETS) this year. The letter proposes a carbon price of at least $50 per tonne by 2030.
Signatories would also welcome mandates for all businesses in nations with net-zero targets to publish aligned decarbonisation strategies and to be subjected to more unified and in-depth disclosures on emissions and climate risk. To encourage businesses to deliver, the letter states, more government funding will need to go to green R&D projects and all subsidies for fossil fuels will need to be phased out.
“It is an important and significant move for this many chief executives to put their names forward for deeper collective collaboration,” WEF's managing director Dominic Waughray said.
“It sends a clear signal to policymakers that many global business leaders are ready to make the transition to a net-zero future. As we move towards COP26, public-private collaboration will be key to unlocking investment, setting more ambitious targets to reduce emissions and turning this ambition into action.”
The letter from the Alliance of CEO Climate Leaders coincides with a similar call to action coordinated by the Investor Agenda, supported by more than 450 investors who collectively manage more than $41trn of assets – around 37% of the global total.
The statement is badged as the largest and strongest ever call to policy action on climate change from the investment space. Each signatory has either already set a net-zero emissions goal for portfolios for 2050 or sooner, or has committed to develop such a target through their participation.
Listed in the open letter are five “priority” actions that the signatories would like all nations to take ahead of COP26. As with the Alliance of CEO Climate Leaders’ letter, the document urges 1.5C-aligned updates to all NDCs and compels all nations to set a net-zero target for mid-century that is legally binding.
It goes on to state the benefits of “clear decarbonisation roadmaps for each carbon-intensive sector”, including a pre-2030 phase-out of thermal coal-based electricity generation. To ensure that businesses can deliver these roadmaps without being “locked-in” to future emissions, the letter argues, all Covid-19 economic recovery policies must be aligned with net-zero and have just transition principles embedded.
As the transition continues, the letter states, businesses should be mandated by governments to disclose in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). G7 nations have already committed to introducing this requirement.
Asset Management One’s president and chief executive Akira Sugano, one of the hundreds of signatories of the call to action, said that “solving the systemic challenges of climate change will not be feasible without coordinated and ambitious policies from national governments”.
Sugano continued: “Ambitious, clear and consistent policies are essential for enabling companies to have greater certainty and confidence in their decision-making. We are committed to continually collaborating with policymakers and fulfilling our role as an asset manager in accelerating the transition to a net-zero society.”
edie’s Sustainable Investment Conference
Financial and environmental experts from some of the world's largest investors and banks will discuss the prominent rise in environmental, social and governance (ESG) investing and what that means for business at edie's Sustainable Investment Conference next month.
The two-day digital event takes place on 13-14 July and will see sustainability professionals from businesses and financial experts from investors meet to discuss the array of challenges and opportunities that embracing the green recovery can bring.