COP Blog: What investors want from Paris

Leading global investors from Europe, the US and Australasia will turn out in force to attend the climate negotiations starting this week in Paris. Stephanie Pfeifer explains what they will be pressing for.

For the most part, investors tend to be known more for their pragmatism than for their passion. Yet many investors head to Paris this week with a passionate desire to persuade negotiators for every government attending this historic round of climate talks not only to agree a clear long-term commitment to curb carbon emissions, but also to put in place the global architecture by which every nation will, in future, both regularly assess (and enforce) their national progress towards this goal, and raise their level of ambition over time.

Investors who belong to the Institutional Investors Group on Climate Change (IIGCC) or its sister networks in America and Australasia have worked hard over the past 18 months through the Global Investor Coalition on Climate Change to call for an ambitious climate agreement in Paris. In May, IIGCC co-ordinated a letter from 120 investor CEOs to G7 Finance Ministers asking for them to come out in support of a long-term emissions reduction goal to underpin the 2°C objective. We were pleased to see the G7 Elmau communique adopt a firm and coherent stance on climate change.

As we arrive in Paris our message could barely be louder

In preparation for the 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) in Paris (COP 21), institutional investors have also engaged leaders of the G20, as well as government officials in their respective countries and at EU level. Moreover, as we arrive in Paris our message could barely be louder. Some 404 institutional investors representing some $24 trillion in assets – more investors than ever before – have endorsed a global call for government leadership to secure a tangible long-term deal that will unleash capital and innovation at the pace and scale required to address the climate challenge and drive the transition to a low-carbon global economy.

Key to this must be the adoption of a review/ratchet mechanism for national climate plans with a clear five- year cycle that will both prevent backsliding and deliver improvements over time; some significant progress on climate finance to increase North-South flows of climate-related investment; and a framework within which countries can complement their Intended Nationally Determined Contributions (INDCs) by voluntarily developing long-term climate road maps that run to 2050.

Investors head to Paris knowing that a global deal will never become easier in the future and that the odds have probably never been better for a good outcome.

To reinforce their message, investors attending COP21 will discuss the importance of strong climate policies and showcase their own actions to curb climate risk at a pair of prominent side events taking place on December 3 and 4 (see below). In addition, the first group of what will grow to be many case studies are being published this week on the website of the Global Investor Coalition.

Above all, investors head to Paris knowing that a global deal will never become easier in the future and that the odds have probably never been better for a good outcome. In particular, the detailed bottom-up process by which national climate plans - self-imposed carbon constraints - were developed and adopted means these commitments are owned by national governments, result from extensive domestic consultation and are backed by considerably more political will than has ever been in play previously.

Stephanie Pfeifer is CEO of the Institutional Investors Group on Climate Change, a European network of 120 members, mainly mainstream investors, with over €13 trillion of AUM.

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