Global analysis ahead of COP26 show how much work is needed to bring investment funds in line with the target to limit global warming
With the COP26 climate change conference starting in just a few days, the investment funds industry has a major role to play in limiting climate change.
But a new analysis by non-profit CDP reveals that most of the more than 16,500 included are not aligned with the temperature limit set by the Paris agreement.
Less than 0.5% of the funds’ assets totalling US$27 trillion are aligned with keeping global temperature rises to well below 2 degrees Celsius.
CDP runs the environmental reporting system and gives temperature scores for companies, funds, and stock indices.
It has discovered that most of the funds analysed are currently invested in assets with an expected temperature path of more than 2.75 degrees of global warming.
Laurent Babikian, joint global director of capital markets at CDP, says the data is catastrophic and does not tie-up with mounting net-zero commitments from the financial sector, or increased interest in ESG.
“This is like an x-ray on the industry, exposing almost all assets on the planet to be out of step with climate objectives,” he said. “It’s an urgent reality check for real, credible actions now from the financial community to step up engagement with their portfolios and take decisive action to transition their portfolios onto a 1.5°C path.”
CDP says that, though growing fast, science-based emissions targets still cover only a tiny fraction of the investable market. Vast volumes of global capital now need to move to be 1.5° C -aligned but can’t because the corporate sector ambition is too low.
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