UK investors with at least £184bn under management support policy action to meet scale of climate challenge outlined in latest UN report
Investment Pensions & benefits Energy transition Responsible investment and stewardship Climate change Net zero
LCP say there are nearly 50 UK asset owners with over £184 bn of assets under management who support their call to close the gap between policy ambition and reality on climate change as today’s latest Emissions Gap Report from the UN Environment Programme highlights the urgent need for government action.
The report highlights that if countries only implement their current climate policies, this would be expected to result in up to 3.1°C of warming compared to pre-industrial levels, far higher than the Paris Agreement commitment to pursue efforts to limit warming to 1.5°C. The authors say that a 7.5% cut in global emissions is needed every year until 2035 to get on a 1.5°C pathway, which would require immediate global mobilisation on a scale and pace only ever seen following a global conflict.
LCP has launched a campaign around five climate policy asks to address the systemic financial risks posed by climate change.
One of their five asks is that “climate action needs to match the scale of the risk, removing the current disconnect between levels of policy ambition and implementation”. So far, 49 UK asset owners with total assets of over £184 bn have signed up to this ask.
LCP believe that policymakers must act on the need for urgent and ambitious measures to reduce greenhouse gas emissions in order to limit temperature rises. Their campaign demonstrates investor support for this action, which is consistent with the commitments made by almost all countries under the Paris Agreement. Failure to act will threaten the environmental and social systems on which economies and financial markets depend.
Analysis by LCP’s energy business, LCP Delta, found that the limited progress made since COP26 means the UK’s 2030 Nationally Determined Contributions (NDC) and the commitment for a fully decarbonised GB power sector target are both at risk.
The total capital investment (excluding financing costs) required for the construction of new power sector generation and supply-side flexibility assets is significant, with an estimated £430bn of investment required in the UK alone between 2023 to 2050.
Claire Jones, Head of Responsible Investment at LCP, commented: “Today’s report is another stark warning about the need for more ambitious action, and our own analysis finds the UK is way behind where is needs to be when it comes to tackling climate risk.”
