Investors with USD 6 trillion call for a global price on carbon

Ahead of COP26 in November, investors managing more than USD 6 trillion in assets have called for a coordinated global price on carbon to reach the Paris Agreement goal of limiting global average temperature rise to 1.5 degrees Celsius above pre-industrial levels.

The call comes from the Net-Zero Asset Owner Alliance, convened by the UN, whose 43 members include some of the world's biggest pension schemes and insurers.

Alliance members are committed to shaping their portfolios to rapidly reduce global greenhouse gas (GHG) emissions and limit global warming to 1.5ºC in a just way that maintains a level international playing field.

Günther Thallinger, Member of the Board of Management Allianz SE and Chair of the Net-Zero Asset Owner Alliance, said: "Non-regressive and revenue-neutral carbon-pricing instruments – harmonized across borders – will not only unleash massive investment in renewable power systems globally, but boost sectors from construction to transport, which are in urgent need of transition."

The paper proposes principles that will see all countries and regions set clear, legally binding net-zero targets, supported by regulated carbon-pricing measures and interim emissions reduction milestones.

Charles Emond, President and CEO of Canadian pension scheme Caisse de dépôt et placement du Québec (CDPQ) said: "A carbon price corridor that provides a clear economic signal as well as more pre-visibility will provide the global environment necessary for companies to make sound investments decisions.´

The group proposes a hybrid model between emissions trading schemes and taxes or levies, with an emphasis on creating a minimum price on carbon that would increase over time. The idea is to give certainty to investors and provide a buffer against price crashes, as well as a maximum price to protect against price spikes. It would also provide stable and reliable incentives for stakeholders to adopt or develop low or zero-emission technology.

This announcement follows the release ahead of last month’s G7 summit of the 2021 Global Investor Statement to Governments on the Climate Crisis. The statement delivers the strongest-ever investor call for governments to raise their climate ambition and implement meaningful policies, or risk missing out on a massive wave of investment in tackling the climate crisis.

Download the full report here.

July 2021

Climate Action