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Global CEOs, investors seek level playing field for clean energy technologies
The urgency of tackling the climate crisis has compelled the CEOs of many of the world's top companies and investors to urge G7 and other world leaders to take "robust" steps to reduce GHGs that will enable clean energy technologies to compete and succeed in the global marketplace.
In an open letter dated 9 June to G7 leaders, the heads of 79 global corporations, including the likes of Amazon, Iberdrola, Ikea, Enel, Nestle, Mahindra Group, and Vestas, said G7 leaders need to introduce "transformative policy change" that will drive more companies to aim for credible net-zero carbon operations by 2050.
To drive those corporate actions, the CEOs said governments need to engage in robust steps, such as pricing carbon on a rising scale, eliminating fossil fuel subsidies, and cutting tariffs on climate-friendly goods so that low-carbon technologies can compete on a level playing field. They also called on political leaders to control "leakage" of carbon credits through international cooperation on a globally connected carbon market as well.
"We now need these commitments to turn into actions, especially in the short term. This is because action from governments can accelerate even more action from companies," the CEOs declared.
The letter by the CEOs was released ahead of the G7 summit starting 11 June and on the same day as investors representing $41 trillion in assets warned governments around the world to raise their climate ambitions or risk losing investment opportunities for tackling the climate crisis. The 457 investors also called for not just improving currently voluntary standards for disclosing climate risk, but for mandating it.
"While we recognize the differentiated responsibilities and respective capabilities of countries, we believe that those who set ambitious targets in line with achieving net-zero emissions, and implement consistent national climate policies in the short-to-medium term, will become increasingly attractive investment destinations. Countries that fail to do so will find themselves at a competitive disadvantage," the 2021 Global Investor Statement to Governments on the Climate Crisis read.
According to a report released by the International Energy Agency (IEA) on 2 June, global investment in energy is set to rebound by nearly 10% in 2021 to $1.9 trillion, reversing most of last year's drop caused by the COVID-19 pandemic. But the IEA said spending on clean energy transitions needs to accelerate much more rapidly to meet climate goals.
The same report said the anticipated $750 billion investment in clean energy technologies and efficiency in 2021, though encouraging, "remains far below what's required to put the energy system on a sustainable path."
Ahead of the G7 meeting, the finance ministers and central bank governors of the countries met and agreed on the need for a financial system that recognizes the material financial risk that the climate crisis poses to investments across the board, be they real estate, transportation, energy and water utilities, or public health.
In a joint communique issued 5 June, they also supported a move towards mandatory climate-related financial disclosures that provide consistent and decision-useful information for market participants and that are based on the Task Force on Climate-related Financial Disclosures (TCFD) framework, in line with domestic regulatory frameworks.
"Investors need high quality, comparable, and reliable information on climate risks. We therefore agree on the need for a baseline global reporting standard for sustainability, which jurisdictions can further supplement," the communique said.
In the US, the Securities and Exchange Commission (SEC) is soliciting public comment on the best way to improve climate risk disclosures. The SEC deemed climate impacts to be a material risk a decade earlier, but has started to scrutinize the reports, given the complaints it has received over inconsistent disclosures.
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