Investors Demand Comprehensive Plans at COP29
Statement sends “clear message” on need for greater policy action from governments to unlock large-scale investment to support decarbonisation efforts.
Asset owners and managers have lobbied for a whole-of-government approach to addressing the climate crisis ahead of the submission of new nationally determined contributions (NDCs) at COP29.
A letter from 534 financial institutions representing US$29 trillion in assets under management called for policy action in five areas to accelerate private sector investment in a “just transition to a climate-resilient, nature-positive, net-zero economy”.
Submitted every five years under the Paris Agreement, NDCs outline each signatory country’s plans to decarbonise their respective economies including a set of intermediate targets and the steps to reach net zero, including policy action required to enforce compliance. The intention is for targets become more ambitious each time they are submitted, with the need increasing in urgency after the Global Stocktake at last year’s COP28.
Coordinated by the Founding Partners of the Investor Agenda – Asia Investor Group on Climate Change, CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change (IIGCC), Principles for Responsible Investment (PRI), and UNEP Finance Initiative (UNEP FI) – the statement calls on governments to increase the ambition of their updated NDCs, which are due to be submitted to the UN Framework Convention on Climate Change by early 2025.
The statement will remain open until 1 November, ahead of COP29 in Baku, Azerbaijan, where it will be presented to governments with the final list of signatures.
“This year’s global investor statement – the most ambitious yet – sends a clear message from hundreds of investors to governments around the world for greater policy action to help unlock private capital to support the decarbonisation of the global economy,” said Stephanie Pfeifer, CEO of the IIGCC.
“While there are notable examples of supportive policies underpinning government climate commitments, the new statement highlights the need for more comprehensive policies by calling for enhanced action on nature and emerging markets finance. COP16 and COP29 provide the ideal settings for governments to respond to investors’ asks.”
Last month, the COP29 presidency shared a letter encouraging parties to submit early biennial transparency reports (BTR), ahead of the November summit, including sharing progress towards NDCs. NDCs are expected to play a central role at this year’s COP.
It also stressed the importance of the enhanced transparency framework, under which Paris Agreement signatories are required to submit a BTR every two years, with the first one due by 31 December this year.
Ambitious action
The investor statement recommended measures including enacting economy-wide public policies to ensure that 2030 and 2035 targets in NDCs align with the goal of limiting global temperature rise to 1.5°C.
It also called for the implementation of “ambitious” national biodiversity strategies and action plans that support the targets relating to nature, water and biodiversity-related challenges contributing to and stemming from the climate crisis in their NDCs, in line with the Global Biodiversity Framework.
Remco Fischer, Climate Lead at UNEP FI, underscored the need for governments to submit “more ambitious” NDCs ahead of next year’s COP30 in Brazil, as well as the importance of a whole-of-government policy approach and industrial strategy to drive the low-carbon transition.
NDCs were discussed at the Bonn Climate Conference in June as part of an assessment on what progress was needed ahead of COP29, but only “modest” progress was made.
Alongside ensuring the alignment of NDCs, the letter suggested providing economy-wide incentives including grants and loan guarantees to accelerate the development and deployment of technologies enabling the net zero transition, as well as developing inclusive national adaptation planning and supportive financing plans to promote resilience.
The signatories recommended mandating climate-related disclosures across the financial system. This included require the public disclosure of 1.5°C pathway-aligned, and independently verifiable climate transition plans for listed and large non-listed companies, asset managers, and regulated asset owners.
The letter called for the implementation of sectoral transition strategies – especially in high-emitting sectors – such as scaling up the deployment of low-carbon energy systems, electrification, and storage. It advocated for removing fossil fuel subsidies and replacing them with clean energy subsidies or tax breaks to boost clean energy deployment and bolster low-emission fuels.
The investors also called for the direction of further private investment into climate mitigation, resilience and adaptation activities in emerging markets and developing economies, including helping to scale up technology and enhancing the use of collaborative platforms such as just energy transition partnerships to scale climate finance commitments and delivery in such markets.
“We’ve heard clearly and consistently from our signatories around the world that, in order for them to accelerate their commitments on climate action, the sector needs to see the rapid evolution of an enabling policy environment,” said Bettina Reinboth, Director of Sustainability Initiatives at the PRI.
“The policy measures called for in the statement are directly additive to this outcome, which stand to benefit not only investors and their ability to deliver returns on behalf of their beneficiaries, but also economies and societies the world over.”
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