Investors representing US$42t AUM submit ‘most ambitious’ asks of governments ahead of COP27

Wong Pei Ting
Published Wed, Nov 2, 2022 · 08:21 PM

A LARGE investor group in Asia representing US$36 trillion in assets under management (AUM) is part of a global effort that has called on governments to radically raise their climate ambition at the COP27 climate summit, which begins in Egypt on Sunday (Nov 6).

Announcing this on Wednesday, the Asia Investor Group on Climate Change (AIGCC) said the latest asks are backed by 602 investor signatories from 33 countries with a collective AUM of US$42 trillion, and are the investors’ “most ambitious” to date.

They were conceived with a view that effective policies in line with limiting global warming to no more than 1.5 degrees Celsius above pre-industrial levels are essential for accelerating and scaling up private capital flows needed for the net-zero transition, it said.

The list of asks – represented in a statement addressing “all governments” – kicked off with a call for countries’ 2030 targets to be aligned with the 1.5 deg C goal. If their targets are not aligned, governments “must enhance and strengthen their 2030 targets” before COP27, taking into account different national circumstances, the statement under the banner, The Investor Agenda, read.

AIGCC, one of the founding partners of The Investor Agenda, coordinated the statement with CDP; Ceres; Investor Group on Climate Change; Institutional Investors Group on Climate Change; Principles for Responsible Investment; and UNEP Finance Initiative.

Among names in the list of signatories are AIGCC members UOB Asset Management, Eastspring Investments Group and BNP Paribas Asset Management. However, Singapore sovereign wealth fund GIC and large money managers BlackRock and Vanguard, also AIGCC members, did not sign this statement.

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Under their second ask, which is for governments to implement 1.5 deg C-aligned domestic policies, the group said that a deadline should be set to phase out thermal coal power and fossil fuel subsidies.

They should also look into guaranteeing long-term resilience and energy security by rapidly scaling up the deployment of low-carbon energy systems, electrification, flexibility and storage, including the development of enabling infrastructure, the document stated.

Other actions it suggested include implementing robust carbon pricing mechanisms that rise over time, and establishing new or more ambitious commitments to end deforestation.

Thirdly, governments are requested to contribute to the reduction in non-carbon dioxide emissions and support the effective implementation of the Global Methane Pledge, to reduce emissions by at least 30 per cent from 2020 levels by 2030.

Next, the group asked for governments to scale up the provision of climate finance from public and private sectors for mitigation, and for adaptation and resilience, with a particular focus on the needs of developing countries.

Lastly, they said governments should strengthen climate disclosures across the financial system, such as by mandating climate reporting that is aligned to the framework set out by the Task Force on Climate-Related Financial Disclosures.

The statement to governments addressed investors’ part as well, with the signatories committing to work with governments to ensure policy mechanisms are developed and implemented to transit to a net-zero future by 2050 or sooner.

The investors are motivated by a need to decrease their exposure to climate risk “as a core fiduciary duty and by the potential opportunities associated with the transition to a net-zero emissions economy”, the statement read. This is why more investors than ever are making net-zero commitments themselves, while engaging companies to cut their emissions and forge transition plans, it added.

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