A group of major global investors called on the world’s 20 leading economies to ratify the Paris Agreement on climate change so that they can start putting their money behind clean energy sources. In an open letter to G20 leaders, the more than 130 investors representing $13 trillion in assets say that implementing the agreement will attract investments in low- and zero-carbon solutions.
“While the private sector can provide much of this vital investment, policy signals must also support climate goals in the clearest possible manner. Maintaining strong growth in clean energy investment is key to tackling climate change. We strongly encourage G20 nations to ratify Paris and help drive trillions of dollars into new clean energy investment opportunities,” said letter co-sponsor Emma Herd, CEO of the Investor Group on Climate Change, in a statement.
The letter calls for a doubling in global investments of clean energy by 2020, finalizing clean-energy and climate-reduction regulations, phasing out fossil-fuel subsidies and establishing fair carbon pricing. They argue that this would provide clarity for investors and provide the kind of support that would make clean-energy investments more attractive.
One hundred and ninety-five countries negotiated the historic agreement in Paris last December. It set out the ambitious target of limiting global warming to 2 degrees Celsius above pre-industrial levels, mostly by reducing greenhouse gas emissions. Supporters hailed the agreement as a major step toward mitigating climate change.
There is still hope that the deal can be successful, but it needs countries to officially adopt the agreement for it to work. So far, none of the world’s 20 leading economies has formally joined the Paris Agreement. The U.S. and China, the top two carbon emitters, indicated that they would join this year but it’s unclear whether it’s actually going to happen in the next few months.
The deal goes into effect only when at least 55 countries, accounting for more than 55 percent of global carbon emissions, formally join. Right now 23 countries have completed the process, and they account for just 1.1 percent of global emissions.
That is why the investors are applying pressure on the G20 as its leaders prepare to meet in China next week. The group is responsible for nearly three-quarters of global carbon emissions, meaning that they are essential to enacting the Paris agreement. By making a financial case, the investors are hopeful that they can incentivize countries to adopt the agreement.
“The Paris Agreement provides a clear signal to investors that the transition to the low-carbon, clean energy economy is inevitable and already under way,” said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change (IIGCC), in a statement. “Governments must ratify the Paris agreement swiftly and have a responsibility to implement policies that drive better disclosure of climate risk, curb fossil fuel subsidies and put in place strong pricing signals sufficient to catalyze the significant private sector investment in low carbon solutions required to realize the agreement’s goals.“