International investor organisations, whose members have assets under management worth hundreds of trillions in yen, have written to Prime Minister Shinzo Abe of Japan to encourage his government to demonstrate global climate change leadership by strengthening its emissions reduction pledges under the Paris Agreement ahead of the crucial 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change slated for November in Glasgow.
In the letter the six investor organisations encourage the Japanese Government to increase the ambition of its 2030 emissions reduction target from the current 26 per cent reduction goal and set a clear path to net-zero emissions by 2050.
The investor organisations also note that current emissions reduction pledges from all countries are not yet sufficient to secure the Paris Agreement goal of limiting global warming to 1.5 degrees.
By lifting its ambition through a revised Nationally Determined Contribution under the Paris Agreement, the investor organisations’ letter said Japan would create a positive market signal that is key to unlocking the private capital needed to accelerate the transition to a zero-carbon economy.
477 investors with USD $34 trillion in assets urge G20 leaders to keep global temperature rise to 1.5 degrees CelsiusDownload
Amundi, Axa, California State Teachers’ Retirement System (CalSTRS), Legal & General Investment Management, Natixis Investment Managers, Mitsubishi UFJ Financial Group, and Sumitomo Mitsui Asset Management, among a record number of signatories to the Global Investor Statement to Governments on Climate Change.
JUNE 26, 2019, OSAKA: Investors from around the globe are urging world government leaders to step up ambition on climate change and enact strong policies by 2020 to achieve the goals of the Paris Agreement, including phasing out thermal coal power and pricing carbon. 477 investors with $34 trillion (USD) in assets, a record number of signatories, are behind the urgent call-to-action to limit average global temperature rise to no more than 1.5 degrees Celsius.
“As institutional investors with millions of beneficiaries around the world, we reiterate our full support for the Paris Agreement and strongly urge all governments to implement the actions that are needed to achieve the goals of the Agreement, with the utmost urgency,” the investors wrote in a Global Investor Statement to Governments on Climate Change.
The statement comes as world government leaders gather at the Group of Twenty (G20) Summit in Osaka, Japan and as the United Nations Secretary-General António Guterres calls on “countries to build no new coal power plants after 2020.”
“Climate change affects all sectors of the economy and all countries,” said Christiana Figueres, Convener of Mission 2020 and former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC). “It is the biggest and most urgent challenge currently facing the world. As we face a true climate emergency, limiting temperature increase to 1.5 degrees Celsius is necessary for survival, and achievable!”
Figueres added, “Investors have a vital role to play in providing the trillions in capital required to support the transition to a low-carbon and climate-resilient future. It is therefore hugely encouraging to see so many investors unite around such a clear and powerful statement to governments. They are showing a sentiment shared across the global community: exponential scale-up and acceleration of climate action is not a choice but a requirement, and represents our best opportunities for financial stability and economic prosperity.”
“As an investor in global markets, we are exposed to the increasing risks and opportunities that climate change presents to our portfolios, especially in Asia where the physical impacts of extreme weather events will be the harshest and of the greatest cost,” said Seiji Kawazoe, Senior Stewardship Officer, Sumitomo Mitsui Trust Asset Management. “To enable us to effectively invest in the necessary transition to net-zero carbon economies around the world, we have signed this statement to urge governments to take the actions needed to set us on the course to limiting global warming to 1.5 degrees Celsius.”
In particular, investors are asking world government leaders to:
Achieve the Paris Agreement’s goals
- Update and strengthen nationally-determined contributions to meet the emissions reduction goal of the Paris Agreement, starting the process now and completing it no later than 2020, and focusing swiftly on implementation
- Formulate and communicate long-term emission reduction strategies
- Align all climate- related policy frameworks holistically with the goals of the Paris Agreement
- Support a just transition to a low carbon economy.
Accelerate private sector investment into the low carbon transition
- Incorporate Paris-aligned climate scenarios into all relevant policy frameworks and energy transition pathways
- Phase out thermal coal power worldwide by set deadlines.
- Put a meaningful price on carbon
- Phase out fossil fuel subsidies by set deadlines
Commit to improve climate-related financial reporting
- Publicly support the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations and the extension of its term
- Commit to implement the TCFD recommendations in their jurisdictions, no later than 2020
- Request the FSB incorporate the TCFD recommendations into its guidelines
- Request international standard-setting bodies incorporate the TCFD recommendations into their standards.
“As shareholders, we are engaging with companies about their emissions, and how their Boards and their business plans are preparing them for a carbon constrained future,” said the California State Teachers’ Retirement System (CalSTRS) CEO Jack Ehnes. “We need the governments of the world to implement the Paris Agreement and regulate emissions on a clear timeline so that businesses know what the interim targets are and the timeline for their action.”
“Renewables are the cheapest energy source across more than two-thirds of the world today. The direction of travel is clear: the economics of wind and solar will continue improving,” adds Carola van Lamoen, Head of Active Ownership, Robeco, a global asset manager with $203 billion in assets under management. “Renewables are expected to outcompete new coal-fired power plants by 2030 almost everywhere. As investors, in our view the development of new coal power plants after 2020 puts at risk both the return on investment and the world’s chance of limiting global warming in line with the goals of the Paris Agreement.”
“As one of Australia’s largest industry superannuation funds, and a major institutional investor, we believe we have an important role to play in bringing about positive action on climate change to protect the retirement savings of our members,” said Deanne Stewart, Chief Executive Officer, First State Super. “This aligns with the view of regulators in Australia, and internationally, who have identified climate change as a significant material and foreseeable risk and have called for immediate action. While we are responding on behalf of our members, this issue will require a coordinated, collective and collaborate response from governments, business and investors to ensure that critical changes are made now for the long-term interests of our members and the community.”
The Investor Agenda Founding Partners strongly welcomed the Intergovernmental Panel on Climate Change’s (IPCC) Special Report on 1.5 degrees Celsius which emphasised the urgency for average annual sustainable energy investments of up to USD $830 billion to transition to a zero-carbon and climate resilient global economy. The report also said that in order to achieve a 1.5 degree Celsius pathway, global net emissions need to decline by 45 percent by 2030 and reach net zero emissions around 2050.
AIGCC appoints new Chair and Vice Chair
The Asia Investor Group on Climate Change (AIGCC) is pleased to announce the appointment of a new Chair, Sophia Cheng, CIO of Cathay Financial Holdings and Wong Dan Chi of Nikko Asset Management as Vice Chair of the AIGCC. AIGCC thanks outgoing Chair Emily Chew for her significant contribution over the past two years.
New AIGCC Chair, Sophia Cheng, CIO of Cathay Financial Holdings commented: “I am delighted to be appointed as the new Chair of the AIGCC. There is so much work to be done in the region. Investors need to work together to identify the solutions that are required in Asia to accelerate climate action and transition to net zero carbon economies.”
Wong Dan Chi, Global ESG Specialist at Nikko Asset Management has been appointed to the newly created Vice Chair role. Commenting on the appointment, Dan Chi noted that “AIGCC plays a critical role in building investor capacity on climate change in the region. It is a privileged opportunity to further our efforts in contributing to the investor community.”
Launch of Japanese translation “Integrating Climate Change into Investment Strategy: A Guide for Investors” 気候変動を 投資戦略に組み入れる: 投資家向けガイドDownload
Launch of Japanese translation “Integrating Climate Change into Investment Strategy: A Guide for Investors” 気候変動を 投資戦略に組み入れる: 投資家向けガイド
April 11, 2018
AIGCC is launching the Japanese translation of the “Integrating Climate Change into Investment Strategy: A Guide for Investors” at RI Asia in Tokyo today.
Asian investors can protect long-term returns by taking greater measures to manage climate risk. This is one of the key messages in a comprehensive climate change investor guide that is being launched in a Japanese translated version today at the RI Asia event in Tokyo by the Asia Investor Group on Climate Change (AIGCC).
‘SumiTrust has been integrating climate change for many years and continues to be actively involved in local and international climate focused initiatives’, said Seiji Kawazoe, Associate General Manager at Sumitomo Mitsui Trust Bank, Ltd and AIGCC member. ‘We are proud to be involved in this guide and look forward to discussing it with our peers in Japan.’
“There is no one-size-fits-all approach to addressing climate change, which the investor guide clearly highlights,” said Arisa Kishigami, Head of ESG, Asia Pacific, FTSE Russell. “As a welcoming additional tool, the report balances common frameworks with a diverse range of specific case studies which investors can learn from and adapt to their individual needs. Arisa is also a working Group member of AIGCC and Management committee member of Japan Sustainable Investment Forum (JSIF).
See full media release.
Investors rally to turn COP23 talk into action
Bonn, November 13, 2017. The US government may have announced plans to pull out of the Paris Agreement but this has not derailed climate progress around the globe as investors, governments and other stakeholders look to ramp up their climate commitments at COP23.
According to a new survey published in September by financial market researchers East & Partners on behalf of HSBC, institutional investors are gearing up to plough increasing amounts of cash into the low carbon transition, with two-thirds saying they plan to increase their level of investment in climate mitigation efforts.
“We are seeing remarkable progress and resolve around the globe by investors and companies on tackling climate change,” said Mindy Lubber, CEO and president of the sustainability non-profit organization Ceres. “Climate risk is a defining corporate challenge of the 21st century. Those that fail to take action will be putting their future at increased risk of failure and those that act will reap the rewards.”
Disclosure on how companies plan to transition their businesses to a low carbon environment is seen as key for investors to better plan their investment strategies. It has also been a fundamental part of the Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD) recommendations, announced in June 2017, which are focused on improving clarity and comparability of climate disclosures, across four corporate areas: Governance, Strategy, Risk Management; and; Metrics and Targets.
“We believe the TCFD’s robust framework provides an essential foundation for investors and others to better assess and effectively price climate-related risks and opportunities, so disclosure of this kind must become a routine part of annual corporate reporting practice,” said Stephanie Pfeifer, chief executive of the IIGCC.
“The recommendations make a great leap forward in standardizing climate-related financial disclosure and enabling investors to compare impacts across companies and sectors,” added Mark Campanale, founder and executive director of Carbon Tracker.
To showcase how investors, the finance sector and companies are working with each other and governments to ensure greater disclosure of climate-related financial information, a side event: Actions on Disclosure of Climate Risks and Opportunities, will be held on at COP23 on 15 November. The event will include two panel discussions with experts from the finance and business sectors. The event is being organised by AIGCC, Carbon Tracker, CDP, Ceres, IGCC, IIGCC, PRI, and UNEP FI.
“The TCFD recommendations represent an important milestone in the recognition of climate change—which our signatories have identified as their biggest concern—as a systemic financial risk. This is why, beginning in 2018, the PRI will start to align its reporting framework to the recommendations,” said managing director, Fiona Reynolds.
“The TCFD recommendations are already helping Australasian investors understand how the effects of climate change and the market response will impact portfolios and to identify investment solutions to build resilience and generate low carbon returns”, said Emma Herd, Chief Executive Officer of the Investor Group on Climate Change.
A hallmark of the TCFD’s disclosure framework is the recommendation that organisations provide climate-related financial disclosures in their main annual financial filings, and that companies determine materiality for climate-related issues consistent with how they determine the materiality of other information included in their filings.
“As a result of increasing levels of investor support for climate disclosure more than 6,200 companies have disclosed their climate performance through CDP this year. The TCFD recommendations will help further strengthen and scale disclosure and ensure we close the loop on climate risk in capital markets.” noted Paul Simpson, CEO of CDP.
“Investors in Asia are beginning to realise the material risks of ESG issues, particularly climate change, to their portfolios, so the recommendations provide essential guidance on what they should be asking from the companies in which they invest,” said Rebecca Mikula-Wright, Director of the AIGCC.
“The TCFD framework – through its emphasis on forward-looking assessments and scenario analysis – has the potential to get corporate and financial organisations to more fully understand – and disclose – the climate-related risks and opportunities they face. At UNEP FI, we will support our members in adopting the recommendations and help accelerate TCFD disclosure practice in the financial industry.” explained Eric Usher, Head UNEP FI.
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Al Gore joins unprecedented Asian investor climate change roundtable
13 September, Singapore: Convened by the Asia Investor Group on Climate Change (AIGCC), an unprecedented gathering of investors representing $3.5trn in assets and former US Vice President Al Gore, met in Singapore this week to discuss climate change risks and opportunities as part of the Milken Asia Summit 2017.
Global investors launch guide to drive engagement on Climate Risk with the automotive sector
Less than a week after the UN confirmed the Paris Agreement would come into effect on 04 November this year, a global network of more than 250 institutional investors (representing assets worth over $24 Trn) has published a guide setting out the threats facing the automotive sector and investor expectations for how these companies must shift gear to adapt their business strategies to address climate related risk and build a sustainable low carbon transport system for the future.
Launching Investor Expectations of Automotive Companies – Shifting gears to accelerate the transition to low carbon vehicles Stephanie Pfeifer, CEO for European investor network IIGCC said, “This guide signals a new area of concerted engagement between big investors and one of the most significant sectors when it comes to tackling the climate challenge. As a consequence of the Paris Agreement, investors expect regulatory frameworks affecting the automotive sector to become far more stringent, not least those governing vehicle fuel performance standards in the EU and elsewhere. Several automotive companies have already recognised they must increase capital expenditure in sustainable driving technology and product pipelines if they are to develop a climate resilient business model. Likewise, that they must engage with policy makers to ensure sustainability is placed at the heart of the industry’s future.”
Commenting on the guide, Dr Hans-Christoph Hirt, Co-Head of Hermes EOS, the stewardship team of Hermes Investment Management which led the drafting of the guide said, “Long-term investors want to ensure that automotive companies are prepared for the challenges stemming from climate change, new technologies, changing policies and shifts in demand caused by global trends. Investors expect the industry to embark upon a smoother route to future prosperity by developing and implementing long-term business strategies which are resilient to climate change and resulting regulatory shifts. Investors expect that such a strategy will feature board-level responsibility for climate change and sustainability, and emission reduction targets with challenging goals. Automotive companies should work together with policy makers to manage the shift to lower emissions vehicles and develop the new infrastructure required to deliver a sustainable low-carbon transport system.”
Chris Davis, senior program director of the Ceres Investor Network on Climate Risk said, “Strong fuel efficiency regulations are in the economic interest of the auto industry; acting as an insurance policy for automakers in the event of future fuel price spikes, and providing significant benefits to suppliers of fuel saving technologies. A growing number of institutional investors recognise that climate change will impact their holdings, portfolios, and asset values in the short and long-term. To achieve sustainable returns for clients and beneficiaries, investors in the automotive sector must engage to ensure companies are prepared to thrive in a carbon constrained environment and support robust policy action sufficient to drive the transition to clean vehicles.”
Emma Herd, CEO at Investor Group on Climate Change and representing the Asia Investor Group on Climate Change said, “Established automotive companies are highly exposed to competition from new entrants responding to growing consumer demand for cleaner vehicles and smart transport services. Consumer demand, combined with targeted government support, is already driving a shift to lower emission fleets in Japan, India, China and South Korea. Auto makers in all regions have significant challenges beyond simply producing cleaner cars, trucks or buses. To show they can act in the long-term interest of investors and beneficiaries they must drive wholesale change across their manufacturing base and through every part of their global supply chains to shrink the carbon footprint of the entire industry.”
About the guide
Investor Expectations of Automotive Companies – Shifting gears to accelerate the transition to low carbon vehicles was developed by the Institutional Investors Group on Climate Change (IIGCC) with support from other investor networks in North America (Ceres’ INCR), Asia (AIGCC) and Australasia (IGCC) in the Global Investor Coalition ( http://globalinvestorcoalition.org/ ). It is intended to be used in tandem with Institutional Investors’ Expectations of Corporate Climate Risk Management (http://www.iigcc.org/publications/publication/institutional-investors-expectations-of-corporate-climate-risk-management ) and is the latest in a series of sector focused guides produced to support investor engagement with key sectors to curb carbon asset and climate risk. It joins existing guides addressing engagement with oil & gas, mining and utilities companies.
This guide is intended to enable investors to engage with the boards of automotive (and component supply) companies about their efforts to re-think their business models and contribute directly to the development of more sustainable driving technologies in order to mitigate long term climate change related risks. The expectations in the guide go further than suggesting automotive companies should support compliance with 2°C regulatory regime. They call on auto companies to:
- actively engage with suppliers, governments and industry peers to innovate for zero emissions vehicles and supporting infrastructure
- close the gap between real world and emissions testing
- pro-actively adjust their business models to incorporate a long-term strategy that includes decarbonisation and the shift to providing mobility services and maintaining competitive advantage over peers
- invest substantially in sustainable driving technologies and product pipelines
- set meaningful targets and metrics to reduce greenhouse gas emissions in operations, fleet and supply chain
- engage publicly with policy makers, investors and the rest of the sector to place sustainability at the heart of the industry’s future.
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