UNITED NATIONS (AN) — More than 500 institutional investors urged governments on Thursday to finally take significant action to reduce carbon emissions — the latest in a more than decade-long series of alarms over the threat of global warming.
Banks, insurers, pension funds and other institutional investors managing US$35 trillion in assets called on nations to step up action to tackle climate change and achieve the 2015 Paris Agreement's goals of preventing average global temperatures from rising more than 2 degrees Celsius above pre-industrial levels, or 1.5 degrees C. if possible.
Their message is meant to influence world leaders and government officials attending next week’s United Nations Climate Action Summit on the sidelines of the annual high-level U.N. General Assembly in New York.
Specifically, the group wants governments to phase out thermal coal power around the globe, put a meaningful price on carbon pollution for commodity trading, end government subsidies for fossil fuels, and update and strengthen nationally-determined plans for reducing greenhouse gas emissions under the Paris accord.
"The global shift to clean energy is underway, but much more needs to be done by governments to accelerate the low carbon transition and to improve the resilience of our economy, society and the financial system to climate risks," they wrote in a statement signed by 515 investors.
Climate finance leadership
Almost 200 nations adopted a rulebook last December for accomplishing the Paris agreement. It sets out how nations must report their carbon emissions and pay for climate action.
But the investors said current government commitments have “an ambition gap” that would lead to "an unacceptably high temperature increase that would cause substantial negative economic impacts."
"This ambition gap is of great concern to investors and needs to be addressed, with urgency," the group said. "It is vital for our long-term planning and asset allocation decisions that governments work closely with investors to incorporate Paris-aligned climate scenarios into their policy frameworks and energy transition pathways."
Since the world has already warmed by 1 degree C. from pre-industrial levels, the goals spelled out under the Paris deal mean the difference between letting the planet warm by another half-degree or 1 degree C.
Last October, the Nobel Prize-winning U.N. Intergovernmental Panel on Climate Change, or IPCC, concluded in a major report that the half-degree difference will have major consequences.
The IPCC found that a half-degree C. less warming would cause fewer deaths and illnesses and 0.1 meter less sea level rise, and it would halve the number of people who lacked fresh water. Substantially fewer heatwaves and droughts would result, it said, and the world’s coral reefs might survive.
Limiting the global average temperature increase to 1.5 degrees C. also would avert 150 million premature deaths over the 21st century, according to the IPCC. But the global economy would have to become “carbon neutral” by 2050 and force a sharply downward curve in CO2 emissions to the atmosphere starting in 2020.
“There is a growing urgency for investors and corporations to act on climate change goals," said Eric Usher, head of U.N. Environment's finance initiative. “To keep the rise to within 1.5-degrees C. globally, leadership from within the investor community will be key."
A decade ago, a group of 285 investors representing more than US$20 trillion in assets warned governments ahead of the U.N. climate summits in New York and Copenhagen that only legally enforceable carbon limits could spur the level of investment needed to keep temperatures from rising further.