As the world prepares for Climate Week NYC and the upcoming COP29 climate conference, more than 530 financial institutions with over $29 trillion in assets under management have issued the 2024 Global Investor Statement to Governments on the Climate Crisis. This powerful coalition of investors, led by The Investor Agenda, is urging governments to take immediate and decisive actions to establish policies that will unlock private capital and accelerate the global transition to net zero emissions. Below, we explore the critical elements of the investor statement, its implications, and the policies they are calling for.
The Call for Mandatory Climate Reporting and Sectoral Transition Strategies
One of the most pressing demands outlined by the investor coalition is the establishment of mandatory climate-related reporting for companies and financial institutions. The statement stresses that such reporting should be in line with the ISSB (International Sustainability Standards Board) standards, ensuring that climate risks and transition plans are fully integrated into financial disclosures. This move is seen as essential for creating transparency and accountability, both of which are critical in mobilizing private investment for climate action.
Moreover, the coalition has emphasized the need for sector-specific transition strategies, particularly in high-emitting industries. The statement calls for the removal of fossil fuel subsidies and a reallocation of these funds toward clean energy initiatives. This step is vital, not only for reducing emissions in the most polluting sectors but also for sending a clear signal to investors about the long-term direction of energy markets. Without such targeted strategies, the transition to net zero risks stalling in the industries that contribute the most to global emissions.
Underinvestment in Emerging Markets: A Major Barrier
The statement highlights a key concern: the stark contrast between policy progress in developed markets and the ongoing underinvestment in emerging markets and developing economies (EMDEs). While developed regions like the U.S. and the EU have made significant developments—thanks in part to initiatives like the U.S.’ Inflation Reduction Act and the EU’s Fit-for-55 package—these efforts are not enough. In 2023, global clean energy investments reached $1.8 trillion, a substantial increase driven by government policies in advanced economies. However, this figure still falls short of the estimated $4.8 trillion needed annually by 2050 to stay on track for net zero.
Emerging markets face a much larger challenge due to a lack of capital flows, policy frameworks, and regulatory environments conducive to green investments. As such, the investor coalition calls on governments to focus on mobilizing private investment in climate mitigation, resilience, and adaptation activities in these regions. Without addressing this disparity, the global transition to net zero will remain uneven, with developing economies at greater risk of being left behind.
Key Policy Asks: Carbon Pricing and Clean Energy Subsidies
Among the coalition’s policy recommendations is the implementation of carbon pricing mechanisms. Carbon pricing is widely recognized as one of the most effective tools for driving the transition away from fossil fuels by making the environmental costs of carbon emissions explicit. By putting a price on carbon, governments can create market conditions that favor cleaner alternatives, thereby accelerating the decarbonization of key sectors. The investors urge governments to submit 2030 and 2035 emissions reduction targets by 2025, in alignment with the global goal of limiting temperature rise to 1.5°C.
In addition to carbon pricing, the statement advocates for the replacement of fossil fuel subsidies with clean energy subsidies. While many countries still subsidize fossil fuels to reduce energy costs for consumers, this approach perpetuates the status quo of high emissions. Shifting these subsidies to clean energy technologies, such as wind, solar, and battery storage, would provide a much-needed financial boost to the renewable energy sector, enabling faster scaling and reducing the cost of green technologies over time.
Addressing Nature and Biodiversity-Related Challenges
The investor coalition’s demands extend beyond carbon emissions, calling attention to nature and biodiversity-related issues that exacerbate the climate crisis. As part of a holistic approach to climate action, the coalition emphasizes the importance of policies that address water management, deforestation, and ecosystem degradation. These challenges are particularly acute in regions where industrial activities, agriculture, and infrastructure development have taken a heavy toll on natural ecosystems.
The financial institutions argue that governments must integrate nature-related risks into their climate policies, ensuring that the solutions for mitigating climate change also contribute to the preservation and restoration of biodiversity. This approach is seen as essential for creating resilient ecosystems that can support sustainable economic growth while providing natural climate solutions, such as carbon sequestration through reforestation and wetland conservation.
Climate Insider Analysis
The 2024 Global Investor Statement to Governments on the Climate Crisis signals a growing urgency among financial institutions for governments to act decisively in addressing the climate emergency. The scale of the assets under management—over $29 trillion—demonstrates that the financial sector is not only aware of the risks posed by climate change but is also prepared to deploy capital to support the transition to a low-carbon economy, provided that the right policy frameworks are in place.
One of the standout aspects of this statement is its emphasis on mandatory climate reporting and sector-specific transition strategies. These measures, if implemented, could significantly accelerate decarbonization efforts across key industries and create new opportunities for green investments. However, the call for greater focus on emerging markets and the need to address nature-related risks highlight the complexities involved in achieving a truly global and inclusive transition.
Ultimately, the success of these efforts will depend on the willingness of governments to collaborate with the private sector and to create the regulatory and market conditions necessary for large-scale investments in climate solutions. The next steps, particularly at COP29, will be critical in determining whether the ambitious goals set out in this investor statement can be met, or whether the world will continue to fall short of the financial and environmental targets needed to avert the worst impacts of climate change.
