Norway’s sovereign wealth fund and a group of investors with more than $10tn under management led a series of corporate climate change pledges expected this week, in events alongside the meeting of world leaders at the UN General Assembly in New York.
The world’s largest sovereign wealth fund said it would require the companies it invests in to reach net zero emissions by 2050 and to publish those goals by 2040 at the latest. At present, only one in 10 of roughly 9,000 companies it has invested in have a net zero target, it said.
The $1.2tn fund, which is based on assets from Norway’s oil and gas revenues, has already sold out of coal producers and consumers, as well as some oil explorers. The updated pledge coincided with New York climate week.
At the same time, the UN-convened Net Zero Asset Owner Alliance, a group of 74 institutional investors with $10.6tn in assets, said in an annual progress report that two-thirds of its members had committed to short-term 2025 decarbonisation targets. That represented an additional $2.5tn worth of assets that were covered by short-term targets, the group said.
Speaking to the Financial Times, alliance chair Günther Thallinger said the energy crisis had created a “very difficult context” that put action on climate change “under pressure” but backsliding must be avoided.
The alliance is part of the Glasgow Financial Alliance for Net Zero, a broad coalition of financial institutions that committed to decarbonising their portfolios at last year’s COP26 climate summit. The group and its members have come under pressure from campaigners for being too slow to act.
Thallinger, who helped found the Net Zero Asset Owner Alliance in 2019 ahead of the creation of Gfanz, said the groups needed to get away from “conceptual discussions” and start to “do the work”.
“We do not want to have concept on top of concept . . . This is something we are trying to communicate to other initiatives,” he said. Time and expertise should be focused on making the real economy cleaner and greener, rather than on writing “another new standard”.
During a speech on Tuesday, UN secretary-general António Guterres urged action on climate change and strengthened his call for governments to impose a windfall tax on the profits of oil and gas companies. He also attacked those who financed and acted for the industry.
“We need to hold fossil fuel companies and their enablers to account,” he said. “That includes the banks, private equity, asset managers and other financial institutions that continue to invest and underwrite carbon pollution. And it includes the massive public relations machine raking in billions to shield the fossil fuel industry from scrutiny.”
On Tuesday, a report co-authored by the International Energy Agency estimated that annual investments of about $1tn in renewables would be needed to supply clean power to the world’s growing population and avoid the catastrophic effects of climate change.
The president of COP26, UK cabinet minister Alok Sharma, and members of the UN’s Race to Zero campaign will once again push financial institutions to eliminate commodity-driven deforestation from their portfolios by 2025, as part of a new report released at the New York climate week summit.
“Due to the unique role of deforestation in driving emissions, and the role of the standing forest and terrestrial ecosystems in mitigating carbon, the financial sector must front load its transition to net zero,” Sharma will say.
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