UK investment bosses managing £8.5 trillion of assets worldwide are urging G7 governments to step up their resistance to climate change, by committing to clearer disclosure of companies’ climate-related risks.
Rich nations should already be mapping out sector-specific decarbonisation plans within their economies, says the Investment Association, to fend off the danger of assets suddenly becoming stranded, and in some cases worthless.
Examples might include oil fields plummeting in value, or property stranded in cities threatened by rising sea levels.
G7 heads of government will meet at Carbis Bay, Cornwall from three days from 11 June to set priorities for the world’s post-Covid economic bounce back.
Transparent, globally agreed principles for valuing climate-linked peril must underpin compulsory reporting of such risks, says the Investment Association, in an open letter to UK-based representatives of leaders of the world’s richest nations.
It is vital such risks are reported in clearly and consistently, the Association argues, if asset managers are to help companies switch to more sustainable ways of business, and take informed investment decisions on behalf of savers.
London-based managers invest a total of £3.7 trillion in overseas shares, and in government and corporate bond issued in foreign currencies. Such global dominance gives heft and impact to the UK’s body’s urgings.
In its letter, the Investment Association includes other measures it says the G7 must embrace:
- Support for the Sustainability Standards Board of global accounting watchdog the IFRS as it perfects ‘at pace’ standards in financial sustainability reporting. Increased cross-border cooperation is needed between national regulators to implement these standards.
- National financial regulators committing to mandatory economy-wide reporting on international Task Force on Climate-related Financial Disclosures (TCFD).
- International common standards agreed and implemented by national regulators on green debt issued by governments.
Investment Association chief executive Chris Cummings said, “The G7 meeting is a prime opportunity for the world’s largest economies to take a coordinated, global approach to tackling climate change.
“As an industry which invests in companies around the world on behalf of both UK and overseas savers and investors, investment managers have a vital role to play in the shift to a more sustainable global economy.
Ensuring high-quality and comparable data on the risks that companies face from climate change is key to achieving this and meeting the net zero targets.”
As part of its commitment to tackling climate change, the Association has committed to the Race to Zero and the Net Zero Asset Managers initiative. So too have UK investment managers with more than £5trillion of assets under management.