While investment in coal-fired plants is falling, oil and gas still represent two-fifths of global energy supply investment. However in Europe, more money could be redirected from fossil fuels to sustainable sectors if a recent action plan from the European Commission and an even more forward-looking report by the European Parliament, are reflected in upcoming legislative proposals.
This would also be good news for long-term climate strategies: getting the right investment in place is crucial to their success. To discuss how best to encourage investors to put their funds into implementing climate strategies, the MaxiMiseR project organised together with the Institutional Investors Group on Climate Change (IIGCC) a webinar on investors and long-term climate planning.
On the webinar panel, Tatiana Bosteels, Director - RPI & Sustainability, Hermes Investment Management explained that an informed change of mind is crucial when it comes to long term climate investments. “We have to educate our investment managers about the carbon risk and investment opportunities, to enable them to make an informed decision”.
Such a change also requires the right policy framework, pointed out Adam White, Senior Project Coordinator, WWF European Policy Office, at the event. “There is a need to create certainty for investors and that can be done through binding 2050 targets, clear processes, reporting and reviewing strategies”.
A good relationship with key investors can be crucial, explained Jan Vandermosten, Sustainable Finance Policy Officer, WWF European Policy Office. He spoke on the webinar about WWF’s work with the 100 biggest asset owners in Europe, encouraging them to change their investment strategies. If this happens, it will impact the whole investment market. “We want those asset owners to align their portfolios with the Paris Agreement and by doing so, to become the drivers of change”.
The good news is that the shift in mentality is already starting to happen, according to Rachel Ward, Head of Policy, Institutional Investors Group on Climate Change (IIGCC).
“Investors care about climate change, ensuring the resilience of existing investments and see huge investment opportunities in the transition to a low carbon economy”, she said. 60% of investors will increase their investments related to climate change, and in Europe even more than 90% are planning to do so, according to research.