Hundreds of investment firms unite to fight climate change

More than 450 investment firms have signed a letter urging governments around the world to improve climate-related regulations.

The group, comprising Aberdeen Standard Investments, LGIM and UBS Asset Management, warned governments that their ability to properly allocate the trillions of dollars needed to support the transition to net zero was hampered by a gap between pledges and actual reductions in emissions.

The letter warned that “these gaps – in climate ambition, political action and risk disclosure – must be addressed urgently.”

The letter was sent ahead of COP26, the 2021 UN climate change conference in Glasgow in November and the G7 meeting in Cornwall last weekend (June 11-13), and outlines five action plans governments should take to help the investment industry tackle climate change.

This includes strengthening their Nationally Determined Contributions to ensure a planned transition to net-zero emissions by 2050, as set out in the Paris Agreement, as well as charting a course to include clear decarbonization roadmaps. for each carbon-intensive sector.

In addition, governments should implement national policies to achieve these goals, including the timely removal of fossil fuel subsidies and the phasing out of thermal coal-based electricity generation.

The letter also asks governments to ensure that economic stimulus packages from Covid-19 support the transition to net zero carbon emissions.

Finally, governments should commit to implementing mandatory climate risk disclosure requirements aligned with the Task Force on Climate-Related Financial Disclosures.

The group added that there could be negative consequences for countries that do not commit to these plans.

He said: “While we recognize the differentiated responsibilities and respective capacities of countries, we believe that those who set ambitious targets in line with achieving net zero emissions and implement coherent national climate policies in the short and medium term , will become increasingly attractive investment destinations.

“Countries that don’t will find themselves at a competitive disadvantage.”

The statement was coordinated by the founding partners of The Investor Agenda, and the signatories represent over $41bn (£29bn) in assets.

Jessica Camus, Head of Europe and Corporate Affairs Director at Diginex Solutions, said now is the time for advisors to broaden their ESG knowledge.

“If financial advisors weren’t considering ESG options in the market, they are now.

“A real challenge for advisors will be understanding companies’ sustainability efforts and educating clients accordingly. The ability to access reliable and qualitative data on ESG and climate-specific indicators is essential to succeed in this transition.

“Not only will this help provide the clarity that investors and nations need, but it will also enable companies with sustainable businesses to attract significant funding.”

The letter comes after the UK government announced it was setting up a task force to implement a new green taxonomy.

The Green Technical Advisory Group (GTAG) will oversee the delivery of the green taxonomy in the UK, advise the government on the development of the framework, help investors, consumers and businesses make green financial decisions and crack down on greenwashing.