Investments in renewable energy and aligning capital with ‘investment positive’ policies were key themes for investors that emerged from discussions at this year’s Climate Week in New York.
Hosted by Climate Group, business leaders, academics and green policy leaders gather to discuss climate action ahead of COP29 in Azerbaijan. This years’ theme is ‘It’s Time’ and addresses the need to triple renewable capacity and double energy efficiency.
In 2023, the 1.5 degree warming limit was breached for a whole year. This comes as last year saw devastating droughts, flooding, wildfires and heatwaves. Climate Group said urgent action is needed to address the emissions gap between what scientists suggest is needed to avoid climate change, and what governments, businesses and investors are delivering.
As a result, Climate Week has seen calls for governments, businesses and the global climate community to accelerate scalable innovation in energy storage, grid infrastructure, low carbon steel and concrete production.
Here, PA Future takes a look at the key announcements for investors:
The Global To-Do list
Chief executive of Climate Group, Helen Clarkson OBE, kicked off Climate Week by revealing Climate Group’s Global To-Do list. This calls on attendees to scale climate finance to help build resilience, boost innovation, and help vulnerable communities adapt to the changing climate.
1. Invest in energy efficiency
Climate Group said energy efficiency of buildings remains overlooked, although it generates high returns. As a result, it urges every business to set a target to become 5% more efficient in 12 months’ time by managing insulation, heating, cooling, industrial energy and using EVs.
It calls for governments and investors to be bolder in their decisions, where investors must engage with companies to set and reach energy efficient targets.
2. Track methane emissions
A fast and sustained reduction in methane emissions is critical to curb global warming, Climate Group said. It calls governments, business and investors to build a more powerful global agency, so that by COP30 next year, they have the power to audit fossil fuel companies’ declarations and deliveries.
This includes engaging with investee companies on the disclosure and mitigation of methane emissions, and identify the actions taken to reduce methane emissions, as head of responsible investments at Nordea Asset Management (NAM), Eric Pederson, wrote about for PA Future here.
3. Focus on the people
In Clarkson’s opening speech, she said that ‘people must be put first’ and pushes for a just transition that upskills workers, provides well-paid jobs and offers compensation where needed.
Specifically, Climate Group calls on investors to support workers who work in the coal industry. This includes a greater compensation for workers to be considered, such as paying workers for three years if a site shuts early.
4. Invest in clean food
The global food system currently contributes to 21-37% of total GHG emissions. Many discussions acknowledged how land-based ecosystems and regenerative strategies are critical to the climate conversation.
As investors have enormous ‘purchasing power’, and investors should direct capital towards healthy, lower carbon food companies to encourage sustainable eating and land restoration.
5. Follow ‘investment positive’ policies
Mission 2025, a coalition of businesses, investors, subnational governments, scientists and data experts, has asked governments to set investment positive policies that push private capital investments in the energy transition.
Investment positive policies those where low-carbon solutions, such as renewable power generation and electric vehicles, are cheaper than fossil fuels.
The policies are to first set targets for renewable energy deployment, in line with tripling renewable energy by 2030, as agreed at COP28 in Dubai. The second is to de-risk investment in renewable energy by offering competitive long-term contracts and tax credits. Third, to set a strict end date for sales of passenger internal combustion engine vehicles, by 2035 at the latest.
There remains investment potential in these three policies as they could accelerate capital to Emerging Markets and Developing Economies.
This comes as data from the Energy Transitions Commission (ETC) revealed that targets and policies are scaling investment into renewables and electric vehicles in many countries. It said that extending these policies to other countries could scale investment to $1trn (£748bn) of the $3.5trn (£2.6bn) per annum required to transition the energy sector in line with 1.5C IPCC pathway.
Helen Clarkson OBE said: “It is time for a reality check. We can’t keep making ambitious commitments but then only half implementing them. We can’t afford to waste another year.
“Climate discussions often focus on targets we need to reach by 2030, or even 2050. These are important milestones, but when it comes to the results we need right now, we’re still collectively failing. Governments and business could start taking these steps, this month, right now.”
