Investors Urged to Align Portfolios with Paris Agreement

Investors

1 February 2018: Transitioning towards a low-carbon economy requires the global investor community to increase climate action, and raise its ambition to divest from fossil fuel investments, according to UN officials attending an investors’ summit.

The ‘Investor Summit on Climate Risk: Capturing the Global Investment Opportunity in the Paris Agreement’ convened on 31 January 2018, in New York, US. Co-hosted by Ceres, the UN Foundation and the UN Office for Partnerships, the event brought together more than 450 investor, company and capital market leaders to discuss future steps for increased action on climate change.

US$825 billion was invested in fossil fuel use in 2017, but over US$5 trillion was divested.

SDG-goals_Goal-13 Climate ActionAddressing the conference, UN Deputy Secretary-General Amina Mohammed underscored that while more than US$5 trillion was divested from fossil fuels in 2017, US$825 billion was invested in fossil fuel use. She said divesting from carbon-intensive assets and aligning with the goals of the Paris Agreement on climate change requires a “complex realignment” that requires action by investors. Stressing urgency, consistency and transparency, she said: financial flows must be aligned with climate-friendly outcomes; more than 1,200 pieces of climate legislation have been implemented in over 60 countries; 13% of global GDP is already covered by some kind of carbon price; and “a new financial system must deliver sustainable investment flows.” She also highlighted the Financial Stability Board’s Task Force on Climate-Related Risk Disclosure and the announcement of many companies to adopt its principles. She said UN Secretary-General António Guterres will convene a climate summit in September 2019 to ensure that ambition is sufficiently calibrated for 2020 and beyond.

UNFCCC Executive Secretary Patricia Espinosa also underscored the important role of private investors in accelerating finance flows for climate action, in parallel to the role of national governments, local governments and cities and provinces. Other speakers noted the need to increase new investments in low-carbon technologies, including energy efficiency, and reduce investments in high-risk, high-carbon fossil fuels, such as coal and oil sands.

During the Summit, a group of investors and partner organizations launched the ‘Investor Agenda.’ The agenda identifies four actions (investment, corporate engagement, investment disclosure and policy advocacy) that investors can take to accelerate and scale up efforts to tackle climate change and achieve the Paris Agreement goals. The agenda provides guidance for investors to transition the world’s financial capital to low-carbon opportunities, and a mechanism to report on their progress, with the organizations producing an annual report on the actions that investors have taken and on outcomes achieved. The group includes Asia Investor Group on Climate Change, CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change, Principles for Responsible Investment and UNEP Finance Initiative.SDG-goals_Goal-17 Partnerships For The Goals

By the end of the Summit, 256 investors with nearly US$30 trillion in assets under management had signed on to Climate Action 100+, a keystone initiative in the Investor Agenda that focuses on leveraging the collective power of investors with combined assets of US$27 trillion to accelerate decarbonization of the world’s most carbon-intensive, publicly listed companies.

Among other announcements made at the Summit, New York State Comptroller Thomas P. DiNapoli announced a US$2 billion increase to the New York State Common Retirement Fund’s low emissions equities index, raising the fund’s sustainable investment portfolio to US$7 billion. Earlier in January, New York City Comptroller Scott Stringer, a Ceres Investor Network member, said the city will take steps to divest its pension funds from fossil fuels.

The Investor Summit on Climate Risk has convened every two years since 2003. [UNFCCC Press Release] [Ceres Press Release] [Investor Summit on Climate Risk Website] [Statement by UN Deputy Secretary-General] [The Investment Agenda] [Climate Action 100+]

References: International Institute for Sustainable Development. 2018. Retrieved from http://sdg.iisd.org/news/investors-urged-to-align-portfolios-with-paris-agreement/?utm_medium=email&utm_campaign=2018-02-06%20-%20SDG%20Update%20AE&utm_content=2018-02-06%20-%20SDG%20Update%20AE+CID_6d45e1b29a77180993f8274027c7d01c&utm_source=cm&utm_term=Investors%20Urged%20to%20Align%20Portfolios%20with%20Paris%20Agreement

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