Investors holding trillions of dollars of assets join calls for green Covid-19 recovery.

IIGC, AIGCC, Ceres, and CDP among major green investment groups urging governments to avoid backing risky, high-carbon projects as part of their coronavirus recovery plans

A coalition of major green investors backed by trillions of dollars of assets under management worldwide have joined growing calls for a green economic recovery from the Covid-19 pandemic, arguing governments "should not lose sight of the climate crisis" as they seek to restart their economies.

In a joint statement issues today, a raft of green investor organisations - including the Institutional Investors Group on Climate Change (IIGCC), the Asia Investment Group on Climate Change, CDP, and Ceres - argued economic stimulus efforts should accelerate the net zero transition.

Representing companies with trillions of dollars of assets under management between them, the groups said investors would be "critical to accelerating the recovery" to the global economic crash, and stressed that institutional investors should "take a long-term view of value and returns" beyond the current crisis.

As such, they urged governments around the world to "factor in the foreseeable, acute, systemic and compounding climate-related economic and financial risks" and to "avoid the prioritisation of risky, short-term emissions-intensive projects".

"Investors increasingly face physical and transitional risks from a rapidly warming planet that challenge their ability to deliver long-term returns for their beneficiaries," the statement reads. "At the same time investors understand that accelerating the net zero emissions transition can create significant new employment and economic growth, along with other co-benefits such as energy security and clean air. With effective recovery policies in place, private investment could be channelled to accelerate the development of new sustainable and climate adaptation assets."

"Ultimately, in their recovery plans, governments should prioritise sustainability and equity, and accelerate the transition to a net zero emissions economy to mitigate climate risk, create new jobs and catalyse the sustainable," it adds.

The intervention joins growing calls for green economic recovery across Europe, where the EU Commission's Green Deal and stated commitment to using stimulus packages to drive decarbonisation in line with a net zero by 2050 target has picked up strong support from leading corporates. Similar sentiments have been expressed by both the German and UK governments, while in France, the government is expected to tell Air France it will only receive a €7bn bailout if it commits to new carbon reduction targets.

However, in stark contrast the White House looks keen to take a higher carbon path to recovery, with President Trump expected to offer a major bailout to the country's beleaguered oil and gas industry without any green strings attached. China, too, is poised to ramp up development of coal-fired power plants this year, while also stepping up investment in clean technologies.

But in their intervention today, the green investors groups - which also include the Investor Group on Climate Change (IGCC), UNEP's Finance Initiative, and the Principles for Responsible Investment (PRI) - argued that as well as providing a chance to accelerate net zero action, the scale of the current pandemic also demonstrated the need for better scenario planning and risk management from companies and investors alike.

CDP's CEO Paul Simpson said long term renewal packages should "accelerate our economy into one that is more resilient, inclusive, and zero carbon".

"It must work in harmony with nature, and not take us back to the production and consumption we know are unsustainable and leave us exposed to increased risk of future crises," he added.

4 May 2020

Business Green