The Investor Agenda Founding Partners React to IPCC ReportPosted 4th March 2022
Incorporating years of peer-reviewed science, the latest Intergovernmental Panel on Climate Change (IPCC) report explores the global and far-reaching impact of the climate crisis by looking at the need for adaptation within ecosystems, biodiversity and communities.
The report highlights the action needed to prevent the worst effects of climate change on economies, individuals and communities, which will most drastically impact those in lower income populations. It also recognizes that mobilizing essential global capital to fund climate solutions and driving effective global climate policy action will be critical in efforts to slow catastrophic global temperature rise.
To meet these aims and to limit warming to 1.5 degrees, in line with the Paris Climate Agreement, The Investor Agenda, a common leadership agenda, is focused on accelerating investor action for a net zero emissions economy. It does this by pulling together the best guidance for investors to develop and publish comprehensive Investor Climate Action Plans (ICAPs), based around four key pillars – investment, corporate engagement, policy advocacy, and investor disclosure. To escalate essential policy action, The Investor Agenda coordinates investors globally via its annual Global Investor Statement to Governments on the Climate Crisis to urge governments around the world to rapidly implement priority policy actions that will enable them to invest the trillions needed to respond to the climate crisis.
The founding partners of the Investor Agenda – AIGCC, CDP, Ceres, IGCC, IIGCC, PRI and UNEP FI – have shared reactions to its publication.
CEO of AIGCC and IGCC and Founding Partner of the Investor Agenda, Rebecca Mikula-Wright:
“This report highlights to investors the mounting risks and costs of inaction and the need to reassess if their current investment policies and strategies are in line with what the science requires, and what their own governments have signed up to.
“Institutional investors have systemic exposure to climate change risks. Unless emissions are reduced, extreme weather will have worsening impacts on property, infrastructure, agricultural production and other climate dependent industries.
“Climate change will also have indirect impacts on sovereign credit risks, supply chains, the property market, insurance pricing or wider economic conditions.
“Climate-aware institutional investors are already disclosing and positioning their portfolios for climate risks and opportunities.
“Governments must strengthen 2030 emissions targets to align with the objectives of the Paris Agreement and build on their policies supporting adaptation investment which can protect communities, the economy and investment returns.
“AIGCC and IGCC look forward to continuing to work with all governments, businesses and our members to continue to strengthen our national approach and unlock private sector investment in achieving emissions reductions and climate resilience measures this decade.”
Founding Partner, CDP’s Chief Impact Officer, Nicolette Bartlett:
“Today’s findings make a focus on immediate emission reductions even more critical. Adaptation will become harder, and near impossible, if warming continues at the current pace and the planet passes tipping point after tipping point and suffers irreversible impacts. Five-year transition plans outlining how companies will transition to the 1.5°C-aligned business model, how their capital allocation will align with this and what governance the company has in place to ensure delivery will be essential for short-term action. Credible transition plans toward a net-zero future must include increasing and tracked adaptation measures if they are to be truly effective, alongside robust, science-based 2030 targets. The reality remains that companies need to halve emissions by 2030 if we are to have any chance of limiting global warming.”
Read the full reaction at CDP.
CEO and President of Ceres and Founding Partner of the Investor Agenda, Mindy Lubber:
“The IPCC continues to remind us of the nightmare we have been living for decades: Our world is on fire and the irreversible impacts keep getting worse and worse. Every capital market player within the economy—investors, companies, policymakers, and regulators—must step up action to tackle this growing crisis while we still have the opportunity to avoid its worst impacts and seize the opportunities that come with decisive action.
“The U.S. Securities and Exchange Commission must release the strongest standardized climate risk disclosure rules that will help investors and companies better measure and manage climate risks. The federal procurement process must also be revised to factor sustainability in government purchasing. The government could use its role as the largest purchaser of products and services, spending $665 billion annually to spur demand and innovation, driving down costs for the rest of the market while creating green jobs across sectors.
“We can make further strides to slow global warming while unlocking the massive opportunities that the transition to net zero represents for economic and job growth and a more equitable world.”
Read the full reaction at Ceres.
CEO of IIGCC and Founding Partner of The Investor Agenda, Stephanie Pfeifer:
“Today’s IPCC report is a further wake up call for companies to demonstrate that they are adequately addressing physical climate risks and opportunities. For investors not already making their expectations on physical climate risks clear to companies, as set out by IIGCC and supported by investors representing USD 10 trillion in collective assets in November 2021, today’s report also serves as a warning. Without this detail and transparency, investors cannot establish a true picture of their investment portfolio risk.
“Investors must also urgently hold companies that are contributing to the effects of climate change accountable, particularly those relating to the fossil fuel industries. Specifically, investors working through Climate Action 100+ must accelerate engagement and seek net zero aligned transition plans immediately. This must be backed up by a particular focus on implementation and evidence of progress.
“Governments and policy makers have had another shot across the bows, with the IPCC report highlighting the continued lack of priority towards climate mitigation and resilience. Only several months on from COP26, we must ensure that words are followed up through action, which includes implementing policies that will drive change at scale.”
Read the full reaction at IIGCC.
Founding Partner PRI’s Director of Climate and Environment, Sagarika Chatterjee:
“The IPCC has set alarm bells ringing loud and clear with this report. As a society, we are not acting rapidly enough to prevent the widespread impact of climate change, and we face a closing window to keep global warming to manageable levels. We stand at a cliff edge, facing the very real prospect of a world changed forever by the impact of man-made global warming. Billions of people will be affected by the damage climate change will do to our planet, its ecosystem, and our very way of life – unless we take drastic action now. International cooperation is at the core of this – a reality felt most keenly in the current geopolitical environment. Looking ahead, investors and governments need to act in concert to realise a global scheme of climate resilient development, which secures sustainable economic growth and preserves the future of our world.”
Read the full reaction at PRI.
Climate Change Consultant at UNEP FI and Investor Agenda Policy Manager, Paul Smith:
“The impacts of climate change cut across sectors and geographies, requiring a strong coordinating role for government. Public institutions can also create the enabling environment for adaptation action through “institutional frameworks, policies and instruments that set clear adaptation goals”. The report underlines the key role for instruments, including budgetary allocations, statutory planning, monitoring and evaluation frameworks. Perhaps most importantly for the finance sector, the report highlights economic instruments intended to address market failures, such as climate risk disclosure.
“Financing adaptation is a huge challenge and will require cross-government support with the development of new business cases for drawing in private sector flows. COP26 last year highlighted the failure to deliver $100bn climate finance for both mitigation and adaptation by 2020, as promised in the 2009 Copenhagen Accord. Clearly the gap is significant, widening with every passing year, and governments are unable to meet this gap or even the more modest targets agreed over a decade ago.
“Private finance therefore must play a role and despite the challenges of financing adaptation there are green shoots, some of which are highlighted in the extended report (IPCC 2022).”
Read the full reaction at UNEP FI.
While the IPCC report is a stark warning of the current state of play, by no means does it demonstrate that it is too late for climate action. By coming together and supporting clear and effective action, whether it is a climate transition plan or backing regional policies for mandatory climate disclosure, investors can make a difference.
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