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Investors' climate pledges take center stage amid growing risks

Ellen Meyers, CQ-Roll Call on

Published in Business News

World leaders renewed a call for climate action and a transition from fossil fuels as they convened at the 14th annual Climate Week in New York City.

Many attendees doubled down in particular on the need for global financial institutions to follow through on pledges to scale back the financing of oil, gas and coal projects, reiterating the growing material climate risks from these fossil fuels.

“We need to hold fossil fuel companies and their enablers to account,” United Nations Secretary-General António Guterres told the U.N. General Assembly on Tuesday. “That includes the banks, private equity, asset managers and other financial institutions that continue to invest and underwrite carbon pollution. And it includes the massive public relations machine raking in billions to shield the fossil fuel industry from scrutiny.”

Climate Week takes place every September alongside the U.N. General Assembly and brings together executives, government officials and others to make the case for an all-hands-on-deck approach on global warming, with financial and political pressure in the United States and worldwide to tackle environmental, social and governance issues.

But they face growing political dissent over the effort to involve Wall Street in tackling climate risk. In the past year, officials in Texas, West Virginia and other red states have enacted laws and adopted regulations aimed to curb ESG investing, including rules to bar state pension funds from investing in financial institutions that boycott fossil fuels.

BlackRock Inc. CEO Larry Fink, who has been targeted by conservatives because of his approach to climate risk in investing, addressed the criticism during the summit, underscoring that consideration of material climate risk is part of investors’ fiduciary duties.

 

“We’re seeing evidence every day that climate risk is investment risk,” Fink said at an event Tuesday hosted by the Clinton Foundation. “People are waking up to that and that’s creating this tectonic shift.”

The U.N.-convened Net-Zero Asset Owner Alliance, a member-led initiative of institutional investors committed to transitioning their investment portfolios to net-zero greenhouse gas emissions by 2050, announced this week that its membership has increased sixfold, to 74, since it was established in 2019. Meanwhile, the group’s combined assets under management have quadrupled to $10.6 trillion.

So far this year according to the alliance’s annual progress report released this week, 44 of its investor members — representing $7.1 trillion in assets under management — have set short-term goals on engagement with companies they invest in, reductions in portfolio emissions, financing transition and emission targets based on sectors,.

Pledges for reductions

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