The answer to who’s missing is nearly every single asset owner and asset manager of any significance. Let me explain why.

An investor friend recently sent me a three-page letter titled “2024 Global Investor Statement to Governments on the Climate Crisis.” The initiative was organized by the Asia Investor Group on Climate Change, CDP, Ceres, the Investor Group on Climate Change, the Institutional Investors Group on Climate Change, Principles for Responsible Investment, and the U.N. Environmental Programme Finance Initiative. It was signed by some 400 investors and a few NGOs.

Writing letter to a friend. Selective focus and shallow depth of field (Photo: Getty)

The Investor Letter

The letter begins, “Investors are increasingly taking a coherent approach to address environmental-related financial risks in their portfolios, including both climate and nature, and seizing the growing opportunities associated with the net zero transition.” This makes sense but there is also the danger, as I’ve written about, of conflating climate risk with climate impact and overstating the financial risks from climate change.

The first paragraph continues with a discussion about science-based net zero strategies and targets and company and investor transition plans. Its final sentence rightly notes that enabling private capital to contribute to making the transition at the necessary rate and scale for the transition requires “the appropriate legal, policy, and regulatory conditions.” I was pleased to see this because so far the dominant “theory of change” is a finance-centric one. I have critiqued this in reviewing a report by the Institute of International Finance (IIF) which very intelligently points out the flaws in this approach.

The letter cites important government policies like the U.S. Inflation Reduction Act (IRA), notes that COP 28 reaffirmed the need for urgent action to keep temperature rise below 1.5°C, the need to triple renewable energy and double energy efficiency globally by 2030, and that finance flows to emerging and development markets (EMDEs) will be a priority for COP 29 in Azerbaijan which begins today. It then calls for “a whole-of-government approach to implement policies in line with countries’ nationally-determined contributions (NDCs) and a 1.5°C scenario.” It then lists what actions governments should take in the following five domains:

1. Enact economy-wide public policies.
2. Implement sectoral transition strategies, especially in high-emitting sectors
3. Address nature, water and biodiversity-related challenges contributing to and stemming from the climate crisis.
4. Mandate climate-related disclosures across the financial system.
5. Mobilise further private investment into climate mitigation, resilience and adaptation activities in EMDEs.”

Close up businessman signing contract making a deal (Photo: Getty)

Who Signed the Letter?

Some very big names signed this letter including the large French asset managers Amundi and BNP Paribas Asset Management, four of the Swedish AP funds (2, 3, 4, and 7), the UK asset managers Aviva Investors and Legal & General, three large U.S. state pension funds (CalPERS, CalSTRS, and New York State Common Retirement Fund), the large Canadian pension fund CDPQ, and Generation Investment Management. Signatories included investors in a wide range of European countries , Australia, China, Japan, Korea, New Zealand, the United Kingdom, and the United States.

There were some names I expected to see but didn’t, such as Brookfield (where Mark Carney is Chair of Brookfield Asset Management and Transition Investing), the big Dutch pension funds APB and PFZW, New York City Employees’ Retirement System, and the gigantic Norwegian pension fund Norges Bank Investment Management.

The general pattern is that the signatories were small socially responsible (SRI) and ethical asset managers and very small pension funds with a heavy concentration being in Europe, with a heavy tilt towards France, Germany, and the Nordics. 

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