Investors Support Paris Agreement & TCFD

A statement in support of the Paris Agreement and the Task Force on Climate-related Financial Disclosure (TCFD) was signed by 288 investors with more than USD $26 trillion in assets.

They are concerned about the “ambition gap” that exists between governments’ commitments and what is needed to limit the global temperature increase to well below 2C above pre-industrial levels.

That gap hampers the ability of investors to properly allocate the trillions of dollars needed to support transition to a low carbon economy.

Below is a slightly reformatted copy of their “Global Investor Statement” to be handed to world leaders this week at the COP24 – the 24th Conference of the Parties to the United Nations Framework Convention on Climate Change in Poland.

Letter Support Paris Agreement & TCFD

As institutional investors with millions of beneficiaries around the world, we reiterate our full support for the Paris Agreement [link] and strongly urge all governments to implement the actions that are needed to achieve the goals of the Agreement, with the utmost urgency.

Investors are taking action on climate change. 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. Investors continue to make significant investments into the low carbon transition across a range of asset classes.

Investors are also increasingly incorporating climate change scenarios and climate risk management strategies into their investment processes and engaging with high-emitting companies. To build on this momentum and maintain investor confidence to further shift investment portfolios, it is vital that policy makers are firmly committed to achieving the goals of the Paris Agreement.

We are concerned that the implementation of the Paris Agreement is currently falling short of the agreed goal of “holding the increase in the global average temperature to well below 2°C above pre- industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industriallevels.”

There is an ambition gap: the full implementation of current Nationally Determined Contributions (NDCs) 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. 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.

In addition, investors need companies to report reliable and decision-useful climate-related financial information to price climate-related risks and opportunities effectively. That is why we welcome the recommendations of the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosure (TCFD) and are taking practical steps to assist their implementation around the world.

In order for the TCFD to be effective, it is vital that governments commit to improve climate-related financial reporting standards by publicly supporting the adoption of the TCFD recommendations and the extension of its term beyond September 2018.

The countries and companies that lead in implementing the Paris Agreement and enacting strong climate and low carbon energy policies will see significant economic benefits and attract increased investment that will create jobs in industries of the future.

To ensure a smooth and just transition to a low carbon economy and to adapt to the warming already locked in to the climate system, it will be important that the benefits of gaining access to cleaner energy sources are shared by all, and that those workers and communities affected by the transition are supported.

With these principles in mind, we call on global leaders to:

Achieve the Paris Agreement’s Goals

  • Update and strengthen nationally-determined contributions to meet the emissions reduction goal of the Paris Agreement, starting the process now in 2018 and completing it no later than 2020, and focusing swiftly on implementation
  • Formulate and communicate long-term emission reduction strategies in 2018
  • Align all climate-related policy frameworks holistically with the goals of the Paris Agreement
  • Support a just transition to a low carbon economy.

Accelerate Investment into Low Carbon Transition

  • Incorporate Paris-aligned climate scenarios into all relevant policy frameworks and energy transition pathways
  • Put a meaningful price on carbon
  • Phase out fossil fuel subsidies by set deadlines
  • Phase out thermal coal power worldwide by set deadlines.
  • Commit to improve climate-related financial reporting
  • Publicly support the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations and the extension of its term

Commit to TCFD Recommendations By 2020

  • Request the FSB incorporate the TCFD recommendations into its guidelines
  • Request international standard-setting bodies incorporate the TCFD recommendations into their standards.

We stand ready to work with government leaders in implementing these actions.

Signed by 288 investors. See pages 2-9. Thanks to Nell Minow of ValueEdge Advisors for bringing this to my attention. Investors are ready but corporations, governments, and their advisors are lagging behind.


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