Etica has signed the 2022 Global Investor Statement on the Climate Crisis to urge governments to implement specific priority policy actions that enable the transition to a climate-resilient, net-zero economy.
As we are at a critical point, taking action to limit global temperature rise to 1.5°C above pre-industrial levels has become vital for accelerating and scaling up private capital flows needed to achieve this goal.
Submitted before COP27 by 602 investors representing almost US$42 trillion in assets under management, this statement is coordinated by the Investor Agenda – a common leadership organization made up of AIGCC, CDP, Ceres, IGCC, IIGCC, PRI and UNEP FI.
The latest scientific findings
Climate change has become a major global concern over the past two decades.
As explained in a recent article published by Science, these changes may lead to abrupt, irreversible, and dangerous impacts with serious implications for humanity. The urgency of taking action has been reinforced by the 6th Assessment Report from the Intergovernmental Panel on Climate Change (IPCC), which anticipates that global warming could exceed 1.5ºC by as early as 2040 unless global greenhouse gas emissions are significantly reduced.
The International Energy Agency’s (IEA’s) 2021 World Energy Outlook warns that current climate commitments and investments in clean energy, and in the net-zero transition are far below the level needed to ensure that global average temperature rise is limited to 1.5ºC.
Five climate actions requested of governments globally
Signatory investors have urged governments worldwide to embed five priority climate actions into their national legislation. These are: to set up medium and long-term climate strategies, to transition energy away from fossil fuels, to end deforestation, to boost climate funding and to strengthen disclosure.
The full text can be found in the statement; here is a summary of the requests:
- Ensure that the 2030 targets defined in the Nationally Determined Contributions align with the goal of limiting global temperature rise to 1.5°C.
- Take early action to ensure these targets are met by implementing domestic policies across the real economy. Such policies should include creating carbon pricing mechanisms, setting a deadline to phase out subsidies for fossil fuels and thermal coal power, and establishing targets to peak and then phase out the use of other fossil fuels. At the same time, governments should develop transparent just transition plans and guarantee long-term resilience and energy security.
- Contribute to the reduction in non-carbon dioxide greenhouse gas emissions and support the effective implementation of the Global Methane Pledge to reduce emissions by at least 30 percent from 2020 levels by 2030.
- By building on the agreed outcomes of COP26, enable financing mechanism from the public and the private sectors for climate mitigation, adaptation, and resilience, with a particular focus on the needs of developing countries.
- Strengthen climate disclosures across the financial system, including transition plans.
Shaping global action: our commitment to tackling the climate crisis
As stated in the IPCC’s 6th Assessment Report, there is a linkage between climate change and vulnerable environmental, social and economic systems. These include food and agriculture, energy, water resources, nature and biodiversity; some ecosystem impacts are already irreversible. We recognize that private capital will play a strong and significant role in mobilizing finance towards a net-zero transition in line with the goals of the Paris Agreement.
“In its dialogue with companies, Etica engages them to commit to set emissions reduction targets certified by the Science-Based Target initiative. We also ask them to develop a strategy, governance and risk management system to identify and mitigate their climate risk, and to report every year on their performance,” says Aldo Bonati, Stewardship and ESG Networks Manager at Etica.
“Our goal is to monitor outcomes vs targets. In addition, we assess transparency and track achievements based on international standards, such as the CDP questionnaires.”
Companies achieving their targets are better equipped to face with climate change risks and can benefit from opportunities arising from the transition to a net-zero emissions economy.
As stated in the United Nations Global Compact, “corporate climate action plays an essential part in sending market signals for countries to enhance climate policy. More and more businesses are seeing opportunity in the zero-carbon economy and taking action on climate change. Governments must use this as a strong vote of confidence and advance ambitious policies that provide companies with the clarity and confidence they need to unlock further investments in climate solutions.”
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