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Urgency

Climate change is the biggest challenge facing humanity. Rising sea levels will displace millions of people, and the economic consequences will be catastrophic unless something is done. We can’t leave saving the planet to future generations: we must act now.

86% of investors see climate change as a key theme in their portfolios by 2023

  • In the last two years climate change has become increasingly important to investors’ investment policies and this is set to continue.

  • This represents a huge increase from only two years ago, when only a third of investors put climate change at the centre, or as a significant factor in their investment policies.
  • This major shift shows how investors now accept the case for co-ordinated, global action to stop a catastrophic rise in global warming.

Climate change is rapidly becoming central or significant to investment policy

2 years ago
Today
Next 2 years
At the centre of our investment policy
9%
26%
44%
A significant factor in our investment policy
24%
47%
42%
Not a significant factor in our investment policy
41%
24%
9%
No part of our investment policy at all
26%
3%
5%


Source: 2021 Robeco Global Climate Survey

'We all say tackling climate change is urgent, but we don’t act as if it is'

The future of humanity and indeed, all life on earth, now depends on us

Climate change is an increasingly emotional subject, not least if you are living at the sharp end of it. In the past few years alone we’ve seen uncontrollable wildfires in Australia, severe hurricanes in the US, and flooding all over the world. Thousands have died, seen their homes destroyed, or been displaced.
  • The issue has brought some memorable quotes from people who in some cases have dedicated their life or work to try to combat it. While it is the politicians that hold the real power in being able to enact measures that can tackle global warming, others can be just as influential.

    Take Sir David Attenborough, for example. The 94-year-old naturalist and broadcaster had dedicated a seven-decade working career to highlighting ‘Life on Earth’ (as his seminal work suggests) and the fragility of it. His moving documentary, ‘A Life on our Planet’, outlines how humans have caused immense destruction to the planet. It produced a memorable warning shot to mankind: 

    “Never before have we had such an awareness of what we are doing to the planet, and never before have we had the power to do something about that… The future of humanity and indeed, all life on earth, now depends on us.”

    With nine of the ten hottest years on record occurring in the last decade, the effects of climate change are now impossible for anyone to ignore. As former US President Barack Obama said: 

    “We are the first generation to feel the effect of climate change and the last generation who can do something about it.”

    This is both a challenge and an opportunity, as new President Joe Biden said when taking the US back into the Paris Agreement in January 2021. His policies if enacted by Congress would invest USD 2.2 trillion in combatting global warming, saying:

    “Climate change is the existential threat to humanity. Unchecked, it is going to actually bake this planet. This is not hyperbole. It’s real. And we have a moral obligation.”

  • “It’s also going to create millions of jobs. We can’t be cavalier about the impact it’s going to have on how we’re going to transition to do all this. But I just think it’s a gigantic opportunity; a gigantic opportunity to create really good jobs.”

    Virtually everyone agrees that the action needed to stop greenhouse gases from entering the atmosphere is decarbonization. This requires international cooperation and treaties to universally – rather than unilaterally – agree to decarbonizing the industries we take for granted, such as fossil fuel. German Chancellor Angela Merkel’s clarion call reflected the urgent need to move beyond words alone: 

    “We must now agree on a binding review mechanism under international law so that this century can credibly be called a century of decarbonization.”

    At Robeco, we believe we are also part of the solution by investing in companies that make a difference. And as our CEO Gilbert Van Hassel makes clear, this is our top priority:

    “It is clear from scientific reports about climate change and carbon emissions that society has to act now. We cannot solve big problems such as climate change and the rapid decline of biodiversity on our own.”

    “But what we can do is set a clear example for the broader industry, work together and encourage other financial institutions such as asset managers to follow suit. We have set this ambition with the conviction that investing is not only about creating wealth but also about contributing to well-being.”

Climate investing is more than just the next big thing

Lucian Peppelenbos (Climate Strategist) and Carola van Lamoen (Head of Sustainable Investing) look at climate change and climate investing from all angles. Listen to the trailer or to the full 25-minute podcast.

The chart that tells it all

This chart from the IPCC reflects the 90 scenarios in which CO 2 emission pathways meet the goal of limiting the increase in global warming to less than 1.5°C in the coming decades. Each incorporates different assumptions about mitigation measures, technological advancements, political priorities, societal preferences and economic development. Scenarios that fall within the blue-shaded area fall within the 1.5°C limit by around 2050 with little or no overshoot; the scenarios in grey have a high overshoot, and fall back within the 1.5°C limit before 2100.

Global total net CO2 emissions

global-total-net-co2-emissions.JPG
Source: IPCC, October 2018, Special Report no. 15
  • The 1.5°C pathways all have in common a reduction of CO2 emissions to net zero, the phasing out of unabated coal use by 2050, and a reliance on renewables for most of the energy supply.

    Four archetypal model pathways are highlighted in the chart: P1 is the most disruptive, with a rapid reduction in emissions towards net zero based on a fast reduction in demand for carbon-intensive products.

  • P2 meets the emissions target in a way that maximizes the contribution to the SDGs; like P1, it is ambitious in terms of changing consumer patterns. 

    The P3 pathway is a sort of middle-of-the-road scenario, with limited change in social and economic trends and a high reliance on carbon-reduction techniques such as bioenergy with carbon capture and storage. The riskiest of the four archetypes is P4: it delays the most and results in overshoot, and therefore requires aggressive compensatory action to bring emissions within target.

Video series: meet our climate investing minds

Are we on track? Moving from red to amber

Governments have woken up to the urgency of tackling climate change. But we’re not yet on track to meet the Paris Agreement unless more urgent action is taken – and that is where investor initiatives can help.

  • The Paris Agreement remains the mother of all initiatives to tackle climate change, as it is the only truly global accord that all nations have committed to. Its core aim is to limit the rise in global average temperatures to below 2°C above pre-industrial levels by 2100. This means the world must become carbon neutral by 2050 at the latest.
  • The agreement was ratified on 22 April 2016, which the UN designated as Earth Day, and signed by 196 countries. Since then, many have committed to becoming carbon neutral by 2050. Some have made more ambitious plans – Austria and Uruguay have pledged to do so by 2040. China, which has the world’s largest carbon footprint, has set a longer-term target of 2060.

Amber alert

  • So, are we on track to meet the Paris Agreement? “No, we’re not,” says Lucian Peppelenbos, climate change strategist at Robeco. “If we use the traffic light system of red, amber, and green, I would now give it an amber light, although a year ago, I would have given it a red.”

    “The step-up to amber is due to the recent policy commitments in Asia, China, Japan and South Korea, but also because everybody knows now what the US will do, now that it has rejoined the Paris Agreement."

  •  "With all this in place, the countries responsible for 63% of global emissions will be in line with the net zero ambition.”

    “If we can actually deliver on our promises by 2050, the world will be on track to limit global warming to 2.1 degrees Celsius; previously we were heading for 3 degrees. This recent wave of commitments is now more ambitious than ever.”

Distributed leadership

  • Moving from amber to green is going to take much more collaboration, Peppelenbos says. “I like the term ‘distributed leadership’ that was coined by the architect of the Paris Agreement, Christiana Figueres,” he says

    “In the real economy, you need policy frameworks, and you need the consumers and technology to be onside. All of these pieces need to come together. As investors, we can redirect capital towards the green, circular, low-carbon economy… and that's vital. But we critically depend on other pieces of the puzzle to move as well.”

  • Some of these pieces are embodied in various initiatives that investors including Robeco have joined to try to move the world from amber to green. The top 10 of these initiatives regarding their importance for investors are listed below.
  • EU Action Plan on Sustainable Finance
    A major policy objective by the European Union which aims to promote sustainable investment across the 27-nation bloc.
    (Brussels, 2018)

    The Institutional Investors Group on Climate Change
    A collaboration of 270 investors taking action to decarbonize their EUR 35 trillion of assets under management.
    (London, 2012)

    Net Zero Asset Managers initiative
    A group of global asset managers including the IIGCC committed to net zero carbon emissions in their investment portfolios by 2050.
    (London, 2020)

    Climate Action 100+
    An investor engagement group that targets the 100+ companies that have the highest greenhouse gas emissions.
    (Paris, 2017)

  • Partnership for Carbon Accounting Financials
    A global partnership founded by a group of Dutch banks to standardize carbon accounting for the financial sector.
    (Amsterdam, 2015)

    Task Force for Climate-Related Financial Disclosures
    An organization launched by the Financial Stability Board to improve and increase reporting of climate-related financial information.
    (London, 2015)

    Transition Pathway Initiative
    A global asset-owner led initiative that assesses companies’ preparedness for the transition to a low-carbon economy.
    (London, 2017)

  • Dutch Climate Accord
    A set of measures by the Dutch government to reduce the country’s CO2 emissions by 49% by 2030 compared to 1990 levels.
    (The Hague, 2019)

    Finance for Biodiversity Pledge
    A group of 37 financial institutions calling for governments to protect threatened biodiversity.
    (Brussels, 2020)

    Powering Past Coal Alliance
    A coalition of 104 countries, cities, businesses and organizations working to accelerate the transition from coal power generation to clean energy.
    (Ottawa, 2017)

Get our latest climate publications!

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'The climate is changing, yet we’re still hooked on fossil fuels'

Masja Zandbergen-Albers - Head of Sustainability Integration

Tracking our climate action progress

Are we on track to meet the goals of the Paris Agreement? It can be hard to keep up with events, particularly given the disruption caused by Covid-19. Two German organizations have come up with a more visual way of measuring progress using a climate action tracker and a carbon countdown clock.
  • The Climate Action Tracker monitors governments’ efforts to reduce their emissions and measures them against the Paris Agreement goal of limiting global warming to below 20C by 2100, and to pursue efforts to keep the temperature rise to 1.50C.

    The tracker is a collaboration between the climate science and policy institute Climate Analytics and the research group New Climate Institute. It quantifies and evaluates climate change mitigation commitments, and then assesses whether countries are on track to meet them.

    It then aggregates country action to the global level, determining the likely temperature increase by the end of the century. A thermometer is used to make visualization easier. Users can see how their own country is doing on a number of metrics on the interactive parts of the tracker’s website.

  • tracking-our-climate-action-progress.png

The Carbon Clock shows how much carbon dioxide can still be released into the atmosphere if global warming is to be limited to the Paris Agreement goals. With just a few clicks, you can compare the estimates for the temperature targets and see how much time is left in each scenario. Currently, there is only six years and 10 months left for the 1.5°C scenario, and 24 years and 8 months for the 2°C scenario.

The clock is run by the Mercator Research Institute on Global Commons and Climate Change, a scientific thinktank founded by the scientific foundation Stiftung Mercator and the Potsdam Institute for Climate Impact Research.

The data for the clock is supplied by the Intergovernmental Panel on Climate Change (IPCC) and is based on the fact that around 42 gigatons of CO2 is emitted globally every year, or 1,332 tons per second. The estimates of the remaining carbon budget are based on the IPCCC’s autumn 2018 ‘Global Warming of 1.5°C’ report. The next update of the Carbon Clock is set to come from the IPCC's Sixth Assessment Report, due in 2022.

Please also visit the other pages of our climate investing platform.
  • Challenge

    Challenge

    If you talk about decarbonization, you talk about data.
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  • Responsibility

    Responsibility

    Countries have to act. Companies have to act. Investors have to act.
    Read more
  • Opportunity

    Opportunity

    Climate change will create clear winners and clear losers.
    Read more
  • Solutions

    Solutions

    Don’t think problems, think solutions.
    Read more
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