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Urgency: Now is the time to address climate risk

Urgency: Now is the time to address climate risk

15-04-2021 | Insight
Climate change is the biggest challenge facing humanity today. Scenarios developed by the Intergovernmental Panel on Climate Change (IPCC) suggest that to limit global warming to less than 1.5°C in the coming decades, the world needs to achieve global carbon neutrality by 2050 and greenhouse gas neutrality by 2070, at the latest. This ‘urgency’ is one of the key topics of our new climate investing hub.

Speed read

  • We have less than 30 years left to achieve global carbon neutrality
  • The pressure is on all stakeholders, not just governments 
  • Investors can play a crucial role in the transition

We have less than three decades left to radically change the way we produce, manufacture, grow, eat, travel, consume, and entertain ourselves. In short, the way we live. Political leaders are the ones who hold the real power to enact measures to tackle global warming. In recent years, governments have actually woken up to the urgency of tackling climate change.

Many countries 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. Despite these honorable pledges, we’re still far from being on track to achieve global carbon neutrality by 2050.

More urgent action is needed. “If we use the traffic light system of red, amber and green, I would say we’re on an amber now; although a year ago, I would have said red,” says Lucian Peppelenbos, climate change strategist at Robeco. The shift to amber is mainly due to the recent policy commitments in Asia, China, Japan and South Korea.

Another crucial reason to be more hopeful this year is that everybody knows what the US will do, now that it has rejoined the Paris Agreement. With all these commitments in place, the countries responsible for 63% of global emissions should be in line with the global net zero carbon ambition.

Climate investing: from urgency to solutions
Climate investing: from urgency to solutions
Read more

All stakeholders need to take action

But while most of the power to avert climate risk lies with political leaders, that doesn’t mean other stakeholders should sit on their hands and wait for regulations to change. The task of achieving global carbon neutrality by 2050 is so formidable that all contributions should prove valuable. This is where investor initiatives can help.

In the last two years, climate change has become an increasingly important consideration in investing – and this is set to continue. It is at the center of, or a significant factor in the investment policy of almost three in four investors. This represents a huge increase from only two years ago, when the same applied to just a third of investors.1

This major shift shows how investors now accept the case for coordinated, global action to stop a catastrophic rise in global warming. While they depend on other pieces of the puzzle coming together, investors can indeed play a vital role in redirecting capital towards the green, circular, low-carbon economy – and therefore help the world move from amber to green.

To learn more about the urgency to act on climate change, please visit the dedicated section in our climate investing hub.

1Source: 2021 Robeco Global Climate Survey.

This article is taken from our climate investing platform

Climate investing: from urgency to solutions
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