$33tr investor fund pressures EU to increase climate change targets
A group of global financiers with $33tr under investment have called on the EU to set a goal of cutting greenhouse gas emissions by 55 per cent by 2030, in a step up from its current plan of 40 per cent.
The Institutional Investors Group on Climate Change (IIGCC) believe the new target is the minimum level needed if Europe has any hope of reaching net zero emissions by 2050.
The group, which represents more than 250 members including pension funds and asset managers, made their proposal prior to the announcement of an increased emissions reduction target from the European Commission President, Ursula von der Leyen.
“The EU has shown it understands climate action and economic growth go hand in hand and has the full backing of investors in creating a more resilient economic future across member states,” said IIGCC CEO Stephanie Pfeifer.
“Nonetheless, it’s imperative this vision is made real in the form of ambitious climate targets. The policy certainty this provides is critical to unlocking the increased private sector investment required to support clean growth and achieve a net zero future, as the foundation of a truly sustainable, long-term, Covid-19 economic recovery across Europe.”
The IIGCC added that a high level of ambition for 2030 is needed to support a more orderly and cost-effective transition in achieving net-zero emissions, between now and 2050.
Its analysis shows a 55 per cent reduction in emissions by 2030 is entirely possible by upscaling mature technologies and accelerating the market development of others.
Further reductions above 55 per cent are possible with additional technology-based efforts, possibly combined with lifestyle changes such as modes of travel, dietary changes and production patterns.
This echoes findings from a study last month which stated that such a cut is both technically and economically feasible to achieve from within the EU.
“This report sets out a clear call-to-action. We have to be far more ambitious in order to facilitate a smooth transition to net zero and this will only be possible with clear, concrete and sector-specific pathways,” said Ian Simm, CEO, Impax Asset Management.
“We particularly support the call for more collaboration and dialogue between policy makers and the investment community. Although most of the required capital will need to come from the private sector, the pipeline of investment opportunities is still restricted by insufficiently detailed policy goals, inadequate market design and unacceptable levels of risk.”
In its annual report about the future of energy, published this week, BP stated that the worldwide demand for oil may have peaked and that the fossil fuel industry now faces an inevitable slow decline over the coming decades. Oil will be replaced by clean electricity instead, following the seismic effects of the Covid-19 pandemic on global demand and the societal shift to sustainable, low-carbon forms of energy.
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