G20 Policies Failing to Attract the Necessary Investments in Climate Solutions

• Assessment of G20 countries’ climate policies finds Australia is one of the least attractive green investment destinations 

• Investors with over $46 trillion in assets are calling on G20 leaders to act as the most consequential international climate conference approaches  

An assessment released today by three major investor groups from around the world finds that G20 countries have significant policy barriers deterring the investments necessary to tackle the growing climate crisis.

The G20 Countries’ Climate Policy Report Card finds that most G20 countries do not have the policy settings in place to attract the urgent investment needed in the zero-emissions, climate resilient transition. This is a significant finding, with G20 countries accounting for 80 percent of global greenhouse gas emissions.

The Report Card measures G20 countries’ progress towards the five policy recommendations in the Investor Agenda’s 2021 Global Investor Statement to Governments on the Climate Crisis, which are key to unlocking the trillions of dollars needed to address the climate crisis.

Among G20 countries, the United Kingdom and European Union are found to be the most attractive destinations for green investment, although they still have substantial improvements to make.

The least attractive green investment destinations are Argentina, Australia, India, Indonesia, Mexico, Russia and Saudi Arabia. These countries rated ‘red’ in relation to at least four of the five Global Investor Statement policy recommendations.

The Report Card collates analyses from independent, credible, rigorous sources to enable investors to identify countries with the most and least attractive green investment environments. It is being released by AIGCC, Ceres and IGCC, all of whom are founding partners of The Investor Agenda, a common leadership agenda accelerating investor action for a net-zero future.

“Ambitious climate policies are critical market signals for investors around the world,” said Ceres CEO and President Mindy Lubber and current chair of the Investor Agenda steering committee. “With the right policy signals for robust economic transition pathways, investors will make large and necessary investments now. Governments must do better to put the right policy settings in place. Those that do will benefit the most.”

“Investors understand that climate risk is investment risk,” said AIGCC and IGCC CEO Rebecca Mikula-Wright and member of the Investor Agenda steering committee. “Investors want to seize the enormous investment opportunities that will be created in the transition to net-zero. Across Asia, Australia and New Zealand, we are urging governments to step up and commit to clear and strong climate policies that will unlock the capital needed to transition to a net-zero economy. Investors are ready.”

With less than two weeks until the most consequential United Nations climate change conference in years (COP26 in Glasgow), time is running out for countries to commit to more ambitious and effective policies to address the climate crisis.

The 2021 Global Investor Statement to Governments on the Climate Crisis urges governments to undertake five priority actions before COP26:

1. Strengthen their NDCs for 2030 before COP26, to align with limiting warming to 1.5 degrees Celsius.
   

2. Commit to a domestic mid-century, net-zero emissions target.
   

3. Implement domestic policies to deliver these targets, incentivize private investments in zero-emissions solutions and ensure ambitious pre-2030 action.
   

4. Ensure COVID-19 economic recovery plans support the transition to net-zero emissions and enhance resilience.
   

5. Commit to implementing mandatory climate risk disclosure requirements aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

The 2021 Global Investor Statement is the strongest-ever unified call from investors for governments to raise their climate ambition and implement meaningful policies. Hundreds of investors from around the world, collectively managing more than US$46 trillion in assets, have now signed on. They represent nearly half of all global assets under management. Signatories to date include some of the world’s largest asset managers and asset owners.

The number of signatories to the 2021 Global Investor Statement is growing. The Statement is open for additional investors to sign until 20 October 2021, via the Investor Agenda website. The final list of signatories will be announced on 27 October.

Report Card findings and sources

View the G20 Countries’ Climate Policy Report Card here.

The assessment of G20 countries’ 2030 targets and domestic policies uses Climate Action Tracker’s analysis, based on modelled domestic pathways derived from global least-cost models, which was released on 15 September 2021. Countries considered ‘green’ have 2030 targets and policies consistent with 1.5 degrees or less of warming. The United Kingdom is the only G20 country whose 2030 target is consistent with 1.5 degrees of warming. The 2030 targets of Canada, the European Union, Japan and the United States are consistent with two degrees of warming. None of these countries have adequate policies in place to achieve their targets. In fact, alarmingly, more than half of G20 countries’ targets and policies are consistent with more than two degrees of warming - some as high as four degrees.

Seven G20 countries  still have not committed to net zero. Investors consider a commitment to net zero by 2050 to be the bare minimum. For a country to be considered ‘green’, its net zero target should also be credible and investable. The Report Card uses Climate Action Tracker’s analysis of the credibility of net zero targets. Apart from the European Union, none of the G20 countries that have committed to net zero have a net zero target that Climate Action Tracker considers is ‘acceptable’.

The Report Card uses Oxford Global Recovery Observatory’s analysis on the percentage of countries’ COVID-19 economic recovery spending that is ‘green’. The best performers have been Turkey (100%), Canada (74.5%), Germany (47.3%) and France (37.6%). Conversely, Indonesia, Mexico, Russia and Saudi Arabia did not allocate any of their COVID-19 recovery spending towards green initiatives. Argentina and Australia spent less than two percent.

G20 countries’ progress towards mandatory climate risk disclosure is based on the findings in BloombergNEF’s Climate Policy Factbook (20 July 2021). Only the UK and EU have committed to mandatory TCFD-aligned disclosure. G20 countries have much work to do to ensure climate risk is effectively managed.

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For media inquiries, please contact: [email protected] (AIGCC), [email protected] (Ceres), [email protected] (IGCC).