World leaders appearing at COP26 have promised to address climate change concerns by committing billions in capital to finance the transition to net zero.
The central theme of the UN’s annual climate conference, this year held in Glasgow in the UK, so far has been financing the transition to a cleaner planet and UK prime minister Boris Johnson stated that the UK would be the world’s first net-zero financial centre.
The UK government revealed at the conference that $130 trillion of global assets, controlled by financial firms, around 40% of assets globally, will align with Paris agreement targets a to limit global warming to 1.5C.
UK chancellor Rishi Sunak said the UK would become the first nation to mandate all listed companies and financial institutions to publish plans on how they will transition to net zero from 2023.
Commenting on the prime minister’s promise, Simon Jones, head of responsible investment at Hymans Robertson, said: “In the proposals announced today, the UK government is seeking to make planning for the transition to net zero and the disclosure of those plans a condition of business.
“Although not initially set to be a mandatory requirement, better and more comprehensive disclosure will allow investors to effectively scrutinise and challenge the plans that organisations have in place. But we need to remember that the challenge is not just one for investors, but for all parts of the economy,” he added.
Elsewhere, the European Investment Bank has partnered with Bill Gates to launch a climate innovation programme, worth €1 billion. The EU Catalyst Programme will finance new technologies and facilitate the usage of them on the ground in Europe.
Japan, meanwhile, has committed an additional $10 billion in climate finance over five years, meaning the world’s wealthiest countries could reach targets of $100 billion a year one year earlier than expected.
India’s Prime Minister made a pledge at the conference to meet net-zero by 2070, marking out a 20- year difference between the date agreed by other countries at the conference, and in a new partnership, South Africa has said it will help decarbonise from the UK, EU, US, France, and Germany.
The US, India, Australia, Turkey, the EU and China have agreed to a UK-led plan to accelerate clean, affordable technology globally by 2030.
The commitments come at a time when climate change is now the single most important ESG issue for investors. Research from AIC research has shown, with 56% of investors reporting it was of great significance to them.
The survey of 454 private investors carried out by AIC Research found that it remains the single most important ESG concern to the majority (56%) of investors.
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