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ICYMI, Ministers Met Their Match in Milan

World leaders had little answer to the criticisms of young climate activists.

Following meaningful commitments from China and the US during the UN General Assembly in New York, the focus of climate diplomacy has shifted to Africa Climate Week and the PreCOP26 summit, which concludes on Saturday in Milan.

Arriving in Italy, weary politicos were greeted (and trolled) by some of the 400 fresh-faced delegates attending the Youth4Climate: Driving Ambition. As joint hosts, Italian and UK leaders accepted the criticism, with UK Prime Minister Boris Johnson admitting that their future is “literally being stolen” via a remote address.

Milan could be the last stop on the long journey from Copenhagen, with developed countries finally meeting their pledge to provide US$100 billion in climate finance to poorer countries. Emissions reduction, adaption strategies, climate reporting, and market and non-market mechanisms are also on the agenda for the 40-50 invited climate and energy ministers.

Climate diplomats and world leaders will return to Italy for a G20 summit on 30 October, most but not all, then making the hop to Glasgow. They will not want for advice or encouragement, including that provided in ESG Investor’s Countdown to COP26 interview series, this week featuring PRI CEO Fiona Reynolds and FTSE Russell CEO Arne Staal.

Global businesses worth US$2.5 trillion this week asked governments to step up efforts to exit coal, drive investment to climate solutions and turn plans into “concrete policies”, while the Energy Transitions Commission outlined immediate priorities to limit climate change to 1.5 degrees, including methane emissions reduction, reforestation and transport electrification.

The tension between global ambitions and domestic policies remains evident everywhere, with China experiencing power blackouts, despite being hailed as a “clean energy powerhouse” by the International Energy Agency for efforts to accelerate peak emissions before 2030. US President Joe Biden struggled to get his US$1 trillion Infrastructure Bill through Congress, which includes clean energy spending, while EU governments again delayed moves that would label gas and nuclear energy as unsustainable from an investment perspective.

COP26 host Johnson’s climate ambitions could get a similar response in Manchester, where his Conservative party holds its annual conference next week, to the one received in Milan, but for very different reasons. The UK government’s continued delays in detailing the policies to meet its climate goals suggests a lack of nerve, heightened by the chaos initiated by spiking wholesale gas prices.

Pension regulation is one area in which the UK can make fair claim to a leadership position, in terms of recognising and managing climate risks. However, parliamentarians this week called on the UK government to use COP26 to improve international coordination on reporting, best practice and taxonomies to further increase climate-positive investment flows.

For some pensions schemes (and larger insurers), regulation is becoming less important as drivers of sustainable investment policies, even if they may still struggle to find asset managers which truly ‘walk the walk’ or corporates using science-based targets as they seek to put net zero commitments under the microscope. Nevertheless, there was regulatory progress on climate reporting this week, notably in the US, as well as reminders of the need to consider investment risks beyond climate.

Of course, all this may have passed by those excited by the return at last of 007 and the speculation over his (or her) next incarnation. With Ford and Rolls-Royce making big commitments to carbon-neutrality this week, are we alone in thinking it’s about time Bond went electric?

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