APG supports an international investor initiative calling for world leaders to step up their efforts to combat climate change. Why are ambitious national climate policies crucial for investors who want to contribute to the Paris Agreement goals? Four questions and answers that explain more about why APG has signed the Global Investor Statement.
Why is it important for investors that governments step up their ambitions?
Government policy is crucial for creating an environment that promotes large-scale private investment in the energy transition. The signatory investors highlight the gap between the commitments governments have made so far and the efforts required to limit global warming to 1.5 ºC. Many of the commitments in the current nationally determined contributions (NDCs) are insufficient to reduce global carbon emissions by 45 percent by 2030 (from 2010 levels). This is the target that needs to be achieved to stay on track to reach net-zero emissions in 2050 or sooner. Many countries also continue to subsidize fossil energy and invest in carbon-intensive infrastructure, including coal-fired power plants, while at the same time insufficiently incentivizing private investment in net-zero solutions. "This reduces our ability to properly allocate the trillions of dollars needed to support the net-zero transition,” the statement says.
What is this initiative exactly?
International investors are urging world leaders to rapidly implement a number of policy steps in the fight against climate change. These steps are, amongst others; step up national climate ambitions for 2030 to help achieve a carbon neutral world by 2050 or earlier; optimize conditions for investments in climate solutions by, for example, introducing realistic carbon prices and abolishing fossil fuel subsidies; and to require companies to report on their transition plans in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
Who signed the statement?
This statement to world leaders is supported by 587 international investors – including APG. Together, they manage nearly € 39,000 billion in assets, representing an estimated 40 percent of all global assets under management. This initiative comes in the run-up to the important UN Climate Conference (COP26) in Glasgow in November. In August, the UN Climate Panel (IPCC) published an alarming report, which stated, among other things, that the physical consequences of climate change are observable right now, and that in order to combat global warming, carbon emissions must be quickly and drastically reduced.
Does this mean investors are shifting responsibility to governments?
Of course, asset managers and pension funds have their own responsibility when it comes to combating climate change. This is explicitly acknowledged in the investors’ statement. “In this shared global crisis, investors and governments each have a responsibility to act swiftly and boldly”. So investors and governments must join forces. This is why our pension funds have already set a range of ambitious targets for reducing the carbon footprint of their equity investments, phasing out investments in coal mines and tar sands and investing in climate solutions. ABG’s largest client ABP announced in June that it would further strengthen its sustainable and responsible investment policy.