Global Investors Worth $32 Trillion Call For COP24 Leaders To Address Climate Change “Ambition Gap”
A total of 415 global investors with $32 trillion in assets under management have this week called on leaders at the United Nation’s COP24 global climate change conference currently underway in Katowice, Poland, to address the climate change “ambition gap” by strengthening their Nationally Determined Contributions to meet the goals of the Paris Agreement.
Announced on Monday at a COP24 side event, a record number of global investors came together as signatories of the 2018 Global Investor Statement to Governments on Climate Change which, at its most simplest, reiterates the signatories’ “full support” of the Paris Agreement and “strongly” urges global governments to implement the necessary actions to achieve the goals of the Paris Agreement, “with the utmost urgency.” Developed by the Asia Investor Group on Climate Change, CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change, Principles for Responsible Investment, and the UNEP Finance Initiative, the Statement serves as a strong and immediate call to action.
“Investors are taking action on climate change,” the authors of the Statement write, highlighting the fact that “much more needs to be done by governments to accelerate the low carbon transition and to improve the resilience of our economy, society, and the financial system to climate risks.” More importantly, the Statement points to “an ambition gap: the full implementation of current Nationally Determined Contributions (NDCs) would lead to an unacceptably high temperature increase that would cause substantial negative economic impacts.” Or, put another way, the ambition gap is the distance between governments’ current commitments and what needs to be done to deliver on the goals of the Paris Agreement.
Schroders — one of the signatories of the Global Investor Statement — has shown that the current state of global policies has us on track for a 4°C temperature increase which will cost $23 trillion in associated global economic losses over the rest of the century — permanent economic damage three- or four-times the scale of the impacts from the 2008 Global Financial Crisis.
The Statement calls on global leaders attending the COP24 talks to do the following:
- Achieve the Paris Agreement’s goals: Update and strengthen nationally-determined contributions to meet the emissions reduction goal of the Paris Agreement, starting the process now in 2018 and completing it no later than 2020, and focusing swiftly on implementation; Formulate and communicate long-term emission reduction strategies in 2018; Align all climate-related policy frameworks holistically with the goals of the Paris Agreement; Support a just transition to a low carbon economy.
- Accelerate private sector investment into the low carbon transition; Incorporate Paris-aligned climate scenarios into all relevant policy frameworks and energy transition pathways; Put a meaningful price on carbon; Phase out fossil fuel subsidies by set deadlines; Phase out thermal coal power worldwide by set deadlines.
- Commit to improve climate-related financial reporting; Publicly support the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations and the extension of its term; Commit to implement the TCFD recommendations in their jurisdictions, no later than 2020; Request the FSB incorporate the TCFD recommendations into its guidelines; Request international standard-setting bodies incorporate the TCFD recommendations into their standards.
“The reality is that the long-term nature of the challenge has, in our view, met a zombie-like response by many,” said Chris Newton, Executive Director Responsible Investment, IFM Investors, which has $80 billion in assets under management and which signed on to the Statement. “This is a recipe for disaster as the impacts of climate change can be sudden, severe and catastrophic. We need our infrastructure assets to continue to provide essential services to communities and economies around the world. We have a duty to our investors to act for the long term when others are clearly sidestepping the challenge.”
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