On #GlobalClimateStrike day, Sue Reid of US nonprofit Ceres says investors with $35trn in assets are demanding governments and major corporations step up ambition to tackle climate change, and highlights companies that are heeding the call
As 16-year-old Swedish activist Greta Thunberg prepares to lead hundreds of thousands in a general climate strike today, she may be surprised to find she has a powerful ally in her quest to decarbonise the global economy: institutional investors.
Just this week, hundreds of investors have stepped up to demand that world leaders and major corporations act on climate. On Monday, 200 major investors with $6.5trn in assets under management urged 46 of the largest publicly traded US corporations to align their climate lobbying with the Paris Climate Agreement. On Wednesday, 230 investors with more than $16.2trn called on companies to demonstrate a clear commitment to eliminating deforestation within their operations and supply chains. And on Thursday, 515 investors with more than $35trn issued the largest ever Global Investor Statement on Climate Change, demanding governments step up ambition to tackle climate change.
Investors have also focused their attention recently on companies and public officials around their positioning on specific US policies, voicing strong opposition to the Trump administration’s attempted rollbacks of federal methane regulations and clean vehicle standards. Those calls have helped spur major automakers to reverse their positions, and even led to some oil and gas companies breaking ranks with their trade organisations.
We’re already feeling the heat. July 2019 was the hottest month ever recorded; the Earth – from the Amazon to the Arctic – is quite literally on fire
Hundreds of investors globally also have engaged directly with the world’s largest carbon pollution-emitting companies in the past year through the investor initiative Climate Action 100+, securing major decarbonisation, disclosure, and lobbying alignment commitments from titans of industry across sectors. In each instance, these investors have made clear that climate action is an economic imperative.
The spotlight is now trained on world leaders and major corporations. As the 2018 Intergovernmental Panel on Climate Change Special Report on limiting global temperature rise to 1.5C makes clear, we must rapidly decarbonise the global economy if we’re to have any chance of limiting global warming to 1.5C and staving off the worst impacts of climate change. This requires fundamental transformation of global energy and land-use systems at unprecedented speed and scale in order to slash carbon pollution nearly in half by 2030.
We’re already feeling the heat. July 2019 was the hottest month ever recorded; the Earth – from the Amazon to the Arctic – is quite literally on fire; the Greenland ice sheet is melting at never-before-seen rates, and the Caribbean is reeling from the devastation of Hurricane Dorian.
Companies and world leaders have nowhere to hide and no time left to wait. They must heed the call to action and set time-bound, science-based targets for greenhouse gas emissions reductions in line with a 1.5C pathway, and they must back their business practices up with lobbying that is aligned with robust climate action.
Fortunately, we have seen some progress from major companies recently, including 1.5C-aligned science-based targets and time-bound commitments to achieve net zero carbon emissions from major companies like Amazon, Maersk, Unilever, Nestlé, Xcel and Duke Energy. We’ve also seen more than 2,200 US companies stand up and say “we are still in” when it comes to the Paris Agreement and continued action on climate change. Some world leaders are acting, too, with 20 countries either committed to, or exploring, going net zero by 2050 or earlier.
Still, we haven’t yet seen a fraction of the action at the scale needed to adequately meet the challenge. Companies must do more. As the UN Climate Action Summit and Climate Week NYC proceed, private sector leaders must double down and make stronger commitments than ever before to accelerate the transition to a net-zero carbon economy. Those who are still lingering on the sidelines must take meaningful action, now. The science tells us it’s necessary. The public – including a new clarion call from global youth – is demanding it. And investors are demanding it, too.
Investors must engage with companies on climate like never before. It also means lending their voices in support of policies aligned with 1.5C
At the same time, investors must do more as well. They must align their portfolios with a 1.5C pathway, including by investing at scale in the low- and zero-carbon opportunities that are central to global clean energy transition. It means engaging with companies on climate like never before. It also means lending their voices in support of policies aligned with 1.5C.
We’ll see a panoply of change-makers in action both inside and outside the halls of the UN and Climate Week NYC next week, where public and investor pressure will set the stage for unprecedented climate action. Private sector and world leaders alike must rise to the occasion and usher in a new era of climate ambition, charting a course for others to follow.
Sue Reid is the vice president of climate and energy at Ceres.