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Exclusive: Investors with $ 34 trillion demand acute climate change



LONDON (Reuters) – Investors who manage more than $ 34 trillion in assets, nearly half of the world's invested capital, demand offensive action by climate change governments that put pressure on the leaders of the world's 20 largest economies this week .

A person goes across Waterloo Bridge during the Extinction Rebellion protest in London, UK on April 18, 2019. REUTERS / Peter Nicholls

In an open letter to "world governments" seen by Reuters represented groups 477 investors stressed " the need for decisive action "on climate change to achieve the objectives of the Paris Agreement.

Nearly 200 nations agreed in Paris in 2015 to limit global average temperature rise to well below 2 degrees Celsius over pre-industrial times. Current policies put the world on the right track for at least a 3C increase by the end of the century.

The letter precedes a G20 summit in Japan on 28-29 June in Japan, and as UN Secretary-General Antonio Guterres calls on the countries to back up more ambitious climate goals.

"There is an ambition gap … This ambition gap is of great interest to investors and must be dealt with as soon as possible," says a statement from investors accompanying the letter.

Governments were urged to strengthen their parliamentary agreement by 2020 phasing out thermal coal and fossil fuel subsidies by set deadlines setting a robust global carbon price by 2020 and improving climate-related financial reporting.

"It is crucial for our long-term planning and asset allocation decisions that governments work closely with investors to incorporate Paris-adapted climate scenarios into their policy frameworks and energy transition pathways," the statement said.

The investor letter was signed by the top directors of the seven basic partners of the Investor Agenda, including Institutional Investors Group on Climate Change and UN-supported principles for responsible investment.

Major investors signing the statement included Legal & General Investment Management and California Public Employees Retirement System (CalPERS), although the world's two largest asset managers, BlackRock and Vanguard did not.

A BlackRock spokeswoman declined to give a specific reason not to support the call, but pointed to a statement from his annual report that said it typically does not participate in such initiatives. Reasons may include overlapping with the company's existing efforts or a debugging of views.

A Vanguard spokeswoman could not give a particular reason, but said it was concerned about the long-term climate risk and was actively involved in a number of climate-related initiatives with emphasis on good publicity.

A US-supported panel of researchers said global warming to 1.5 C would cost at least $ 830 billion. Dollars a year, but the cost of missing action is assumed to be much higher.

DIVESTING DRIVE

A number of institutional investors have already begun to dispose of fossil fuel companies because of the risk that their assets will be stranded as renewable energy costs fall.

Last month, U.N.'s Guterre urged countries to complete approval of new coal-fired power plants beyond 2020 as well as fossil fuel subsidies.

Carola van Lamoen, head of active ownership of global asset manager Robeco, said: "As investors, we believe that the development of new coal-fired power plants after 2020 puts both the return on investment and the world's chance of limiting global warming in line with with the Paris Agreement. "

But some countries claim that they must continue to use fossil fuels to drive their economic development.

A report by researchers tracking the countries' progress towards limiting global warming showed that only five out of 32 countries have targets in line with a 2C limit.

A report from the Overseas Development Institute thinktank said on Tuesday that the G20 governments increased support for coal-fired power plants, especially in poor countries, from $ 17 billion to $ 47 billion a year from 2014 to 2017.

Japan, as host The G20 summit in Osaka this week has been criticized for its plans to continue using coal. It supports the use of carbon capture and storage to trap emissions, but the technology is expensive and not commercial.

Reporting by Simon Jessop and Nina Chestney; Editing Alexander Smith

Our Standards: Thomson Reuters Trust Principles.

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