Fifteen years ago developed countries committed $100 billion annually to support climate mitigation and adaptation in developing countries – a target they met for the first time two years ago. The $116 billion delivered in 2022 also remains far short of the estimated $2.4 trillion a year by 2030 required to meet global climate goals.
As countries gather this week in Baku, the capital of Azerbaijan, for the UN climate conference, COP29 is a pivotal moment to signal how they will strengthen their national climate plans next year and step up their actions on reducing emissions. These offer an opportunity for nations to produce more comprehensive and concrete strategies to attract the long-term private investment that will be crucial for their implementation and delivery.
Ratcheting country commitments
The Paris Agreement is legally binding and works in a five-year cycle of increasingly ambitious climate commitments. This approach has been dubbed ‘the ratchet mechanism’ as countries progressively notch up their pledges to reach the target of net zero by 2050.
Known as Nationally Determined Contributions (NDCs), these include measures each country is taking to adapt to climate change, as well as promises to reduce greenhouse gas emissions – with specific targets – and implementation strategies and timeframes to achieve them.
With current commitments falling short of the emissions reductions needed to limit global warming to 1.5°C, a ratcheting of near-term pledges to 2030 will be crucial to limit peak temperature changes.
Investor action crucial
In the last few years, coalitions of financial institutions have announced increasingly ambitious commitments to address the climate crisis. To help accelerate the energy transition, asset owners and managers are also developing and implementing comprehensive pathways that align their investments with the goal of net-zero emissions. These strategies provide credible interim targets and include plans to dramatically ramp up renewables, phase down fossil fuels, green the financial sector, halt deforestation, reform food systems and agriculture.
To reach our 2050 objective, Storebrand Asset Management set ambitious short-term targets for 2025, namely to reduce emissions across investments portfolios by 32% and invest 15% of AUM in solutions. While we are proud of the progress that we have made, we will continue to support government action by ratcheting our own ambition through 2030.
New Storebrand commitment
In the coming weeks, we will launch our updated climate commitment with credible yet ambitious 2030 targets which continue to be based on IPCC 1,5-degree scenarios. To deliver on these promises, we are identifying both transition leaders and laggards while engaging with a broad range of companies and policymakers. Some of these companies are significantly misaligned with the Paris Agreement and could be divestment targets if they do not meet our high expectations.
Going forward, credible transition strategies will not be enough. We will also expect companies to demonstrate and publicly disclose their political engagements including at climate and biodiversity summits. While increased corporate presence at COPs demonstrates growing awareness, it has been reported that companies have also lobbied against climate policies in large numbers. It is important that all stakeholders are involved in finding solutions to halt global warming and biodiversity loss, but it is also critical that businesses do not use their influence to dilute regulations or delay actions necessary to solve our climate and nature crisis.
