Investors managing USD 39 trillion have called on governments to raise their climate ambition, including setting plans to phase out fossil fuel use and forcing companies to set out science-based transition plans.
The move by some – but not all – top fund firms, comes ahead of the next round of global climate talks in Egypt, in November. This year’s letter is the most ambitious appeal to officials yet, backers of the effort said, with additional requests for action on tackling methane pollution and scaling up finance to poorer countries.
Organised by the Investor Agenda, a group of investor-focused groups counting many of the world’s largest fund managers as members, the ‘2022 Global Investor Statement to Governments on the Climate Crisis’ was the 13th one to be issued.
“Investors are taking action as it is not only permitted by law but is in many cases required to ensure their ability to generate returns in the long-term as a core fiduciary duty and benefit from the opportunities associated with the shift to a net-zero emissions economy,” the statement said.
Other requests by the investors included scaling up low-carbon energy systems; implementing carbon pricing mechanisms that rise over time; establishing new or more ambitious plans to end deforestation.
In all, 532 investors signed the latest iteration including UBS Asset Management UBSG.S, Amundi SA AMUN.PA and Federated Hermes FHI.H.
However, none of the top three US index fund managers, BlackRock BLK.N, Vanguard and State Street Corp STT.N signed onto this letter.
This reticence comes as the process of investing with an eye on environmental, social and governance-related issues, or ESG, faces growing pressure in the United States.
Representatives for BlackRock declined comment, while Vanguard did not respond to queries.
Benefits for Investor Agenda
The recent inception of the Intrinsic Exchange Group (IEG) partially explains the direction and motivations of the Investor Agenda.
Its website states that “IEG is pioneering a new asset class based on nature and the benefits that nature provides (termed ecosystem services). These services include carbon capture, soil fertility and water purification, amongst others.”
It further explains “This new asset class is the foundation of a new form of corporation called a “Natural Asset Company” (NAC). The primary purpose of these companies is to maximize Ecological Performance, the production of ecosystem services, to which they have rights and authority to manage.”
Fortune Magazine noted that, “in return, investors will get access to a new form of sustainable investment – a space that has enthralled the likes of Blackrock CEO, Larry Fink”
“In partnership with the New York Stock Exchange, IEG is providing a world-class platform to list these companies for trading, enabling the conversion of natural assets into financial capital. The NAC’s equity captures the intrinsic and productive value of nature and provides a store of value based on the vital assets that underpin our entire economy and make life on earth possible,” the IEG website spells out.
Blackrock and Vanguard’s portfolio
Blackrock and Vanguard represent two of the top three shareholders in Walmart Inc, Pfizer Inc, Moderna Inc, Microsoft Corporation, Apple Inc, Alphabet Inc (the parent company of Google), The Walt Disney Company, Fox Corporation, AT&T Inc, JPMorgan Chase & Co and many more of the other top food, pharmaceutical, software, social media, banking and media institutions.