Asset Managers’ Climate Pledges: Bold Promises or Mere Rhetoric?

InfluenceMap

InfluenceMap Asset Managers and Climate Change Report: Climate analysis of the sector’s portfolios, stewardship, and policy influence, August 2023.

Despite the wave of global commitments towards achieving net-zero emissions by 2050, the recent study InfluenceMap Asset Managers and Climate Change Report: Climate analysis of the sector’s portfolios, stewardship, and policy influence by FinanceMap paints another picture. The world’s largest asset managers, controlling an astounding $72 trillion, are falling dramatically short of their ambitious climate pledges.

FinanceMap’s analysis scrutinized the strategies of 45 titan asset management firms. Their threefold criteria encompassed portfolio alignment with climate objectives, effective stewardship of their invested companies, and genuine engagement with sustainable finance policies. The results are concerning: a staggering 95% of portfolios failed to align with the imperative IEA Net Zero Emissions by 2050 Scenario.

The research also revealed that these financial behemoths are holding nearly three times the equity value in fossil fuel enterprises compared to their ‘green’ investments. The definition of ‘green’ here leans on the EU Taxonomy and Bloomberg data. Equally alarming is the 45% dip in top-tier Stewardship asset managers since 2021, those once hailed for their groundbreaking climate stewardship practices.

Though European asset managers, such as Legal & General Investment Management, BNP Paribas, and UBS, demonstrate commendable engagement with their investee companies, their American counterparts present a grim scenario. US firms like BlackRock, Vanguard, and Fidelity Investments have shown declining or consistently low stewardship scores, hinting at a worrying trend in the US’s approach to environmental, social, and governance factors.

Even as these revelations come to light, the irony lies in the fact that 86% of these asset managers are members of at least one industry group that actively oppose the very sustainable finance policies needed for global decarbonization.

Daan Van Acker, FinanceMap’s Program Manager, summarizes the situation aptly: “While they may talk the talk, most asset managers are not walking the walk.”

For access to the report, readers can visit FinanceMap.org.

United in Science 2020

A multi-organization high-level compilation of the latest climate science information

According to a new multi-agency report from leading science organizations, United in Science 2020:

  • 2016-2020 is set to be the warmest 5-year period on record
  • Lockdown related fall in emissions will not reduce CO2 concentrations
  • Global fossil CO2 emissions rose 62% 1990-2019
  • Consumption patterns must change to support climate action
  • Climate change impacts cascade from mountain peaks to ocean depths
  • Glacier and snowmelt threatens water supplies for billions
  • Droughts and floods produce the most impacts
  • Sea level rise is accelerating due to polar ice melt.

This has been an unprecedented year for people and planet. The COVID-19 pandemic has disrupted lives worldwide. At the same time, the heating of our planet and climate disruption has continued apace.

Never before has it been so clear that we need long-term, inclusive, clean transitions to tackle the climate crisis and achieve sustainable development. We must turn the recovery from the pandemic into a real opportunity to build a better future.

We need science, solidarity and solutions.”

—António Guterres, United Nations Secretary-General

Greenhouse gas concentrations – which are already at their highest levels in 3 million years – have continued to rise. Meanwhile, large swathes of Siberia have seen a prolonged and remarkable heatwave during the first half of 2020, which would have been very unlikely without anthropogenic climate change. And now 2016–2020 is set to be the warmest five-year period on record. This report shows that whilst many aspects of our lives have been disrupted in 2020, climate change has continued unabated.”

—Professor Petteri Taalas, WMO Secretary-General

Key Findings

Greenhouse Gas Concentrations in the Atmosphere (World Meteorological Organization)

Atmospheric CO2 concentrations showed no signs of peaking and have continued to increase to new records. Benchmark stations in the WMO Global Atmosphere Watch (GAW) network reported COconcentrations above 410 parts per million (ppm) during the first half of 2020, with Mauna Loa (Hawaii) and Cape Grim (Tasmania) at 414.38 ppm and 410.04 ppm, respectively, in July 2020, up from 411.74 ppm and 407.83 ppm in July 2019.

Reductions in emissions of COin 2020 will only slightly impact the rate of increase in the atmospheric concentrations, which are the result of past and current emissions, as well as the very long lifetime of CO2. Sustained reductions in emissions to net zero are necessary to stabilize climate change.

Global Fossil CO2 emissions (Global Carbon Project)

COemissions in 2020 will fall by an estimated 4% to 7% in 2020 due to COVID-19 confinement policies. The exact decline will depend on the continued trajectory of the pandemic and government responses to address it.

During peak lockdown in early April 2020, the daily global fossil COemissions dropped by an unprecedented 17% compared to 2019. Even so, emissions were still equivalent to 2006 levels, highlighting both the steep growth over the past 15 years and the continued dependence on fossil sources for energy.

By early June 2020, global daily fossil COemissions had mostly returned to within 5% (1%–8% range) below 2019 levels, which reached a new record of 36.7 Gigatonnes (Gt) last year, 62% higher than at the start of climate change negotiations in 1990.

Global methane emissions from human activities have continued to increase over the past decade. Current emissions of both COand methane are not compatible with emissions pathways consistent with the targets of the Paris Agreement.

Emissions Gap (UN Environment Programme)

Transformational action can no longer be postponed if the Paris Agreement targets are to be met.

The Emissions Gap Report 2019 showed that the cuts in global emissions required per year from 2020 to 2030 are close to 3% for a 2 °C target and more than 7% per year on average for the 1.5 °C goal of the Paris Agreement.

The Emissions Gap in 2030 is estimated at 12-15 Gigatonnes (Gt) CO2e to limit global warming to below 2 °C. For the 1.5 ° C goal, the gap is estimated at 29-32 Gt CO2e, roughly equivalent to the combined emissions of the six largest emitters.

It is still possible to bridge the emissions gap, but this will require urgent and concerted action by all countries and across all sectors. A substantial part of the short-term potential can be realized through scaling up existing, well-proven policies, for instance on renewables and energy efficiency, low carbon transportation means and a phase out of coal.

Looking beyond the 2030 timeframe, new technological solutions and gradual change in consumption patterns are needed at all levels. Both technically and economically feasible solutions already exist.

State of Global Climate (WMO and UK’s Met Office)

The average global temperature for 2016–2020 is expected to be the warmest on record, about 1.1 °C above 1850-1900, a reference period for temperature change since pre-industrial times and 0.24°C warmer than the global average temperature for 2011-2015.

In the five-year period 2020–2024, the chance of at least one year exceeding 1.5 °C above pre-industrial levels is 24%, with a very small chance (3%) of the five-year mean exceeding this level. It is likely (~70% chance) that one or more months during the next five years will be at least 1.5 °C warmer than pre-industrial levels.

In every year between 2016 and 2020, Arctic sea ice extent has been below average. 2016–2019 recorded a greater glacier mass loss than all other past five-year periods since 1950. The rate of global mean sea-level rise increased between 2011–2015 and 2016–2020.

Major impacts have been caused by extreme weather and climate events. A clear fingerprint of human-induced climate change has been identified on many of these extreme events.

The Ocean and Cryosphere in a Changing Climate (Intergovernmental Panel on Climate Change)

Human-induced climate change is affecting life-sustaining systems, from the top of the mountains to the depths of the oceans, leading to accelerating sea-level rise, with cascading effects for ecosystems and human security.

This increasingly challenges adaptation and integrated risk management responses.

Ice sheets and glaciers worldwide have lost mass. Between 1979 and 2018, Arctic sea-ice extent has decreased for all months of the year. Increasing wildfire and abrupt permafrost thaw, as well as changes in Arctic and mountain hydrology, have altered the frequency and intensity of ecosystem disturbances.

The global ocean has warmed unabated since 1970 and has taken up more than 90% of the excess heat in the climate system. Since 1993 the rate of ocean warming, and thus heat uptake has more than doubled. Marine heatwaves have doubled in frequency and have become longer-lasting, more intense and more extensive, resulting in large-scale coral bleaching events. The ocean has absorbed between 20% to 30% of total anthropogenic COemissions since the 1980s causing further ocean acidification.

Since about 1950 many marine species have undergone shifts in geographical range and seasonal activities in response to ocean warming, sea-ice change and oxygen loss.

Global mean sea-level is rising, with acceleration in recent decades due to increasing rates of ice loss from the Greenland and Antarctic ice sheets, as well as continued glacier mass loss and ocean thermal expansion. The rate of global mean sea-level rise for 2006–2015 of 3.6 ±0.5 mm/yr is unprecedented over the last century

Climate and Water Resources (WMO)

Climate change impacts are most felt through changing hydrological conditions including changes in snow and ice dynamics.

By 2050, the number of people at risk of floods will increase from its current level of 1.2 billion to 1.6 billion. In the early to mid-2010s, 1.9 billion people, or 27% of the global population, lived in potential severely water-scarce areas. In 2050, this number will increase to 2.7 to 3.2 billion people.

As of 2019, 12% of the world population drinks water from unimproved and unsafe sources. More than 30% of the world population, or 2.4 billion people, live without any form of sanitation.

Climate change is projected to increase the number of water-stressed regions and exacerbate shortages in already water-stressed regions.

The cryosphere is an important source of freshwater in mountains and their downstream regions. There is high confidence that annual runoff from glaciers will reach peak globally at the latest by the end of the 21st century. After that, glacier runoff is projected to decline globally with implications for water storage.

It is estimated that Central Europe and Caucasus have reached peak water now, and that the Tibetan Plateau region will reach peak water between 2030 and 2050. As runoff from snow cover, permafrost and glaciers in this region provides up to 45% of the total river flow, the flow decrease would affect water availability for 1.7 billion people.

Earth System Observations during COVID-19 (Intergovernmental Oceanographic Commission of UNESCO and WMO)

The COVID-19 pandemic has produced significant impacts on the global observing systems, which in turn have affected the quality of forecasts and other weather, climate and ocean-related services.

The reduction of aircraft-based observations by an average of 75% to 80% in March and April degraded the forecast skills of weather models. Since June, there has been only a slight recovery. Observations at manually operated weather stations, especially in Africa and South America, have also been badly disrupted.

For hydrological observations like river discharge, the situation is similar to that of atmospheric in situ measurements. Automated systems continue to deliver data whereas gauging stations that depend on manual reading are affected.

In March 2020, nearly all oceanographic research vessels were recalled to home ports. Commercial ships have been unable to contribute vital ocean and weather observations, and ocean buoys and other systems could not be maintained. Four full-depth ocean surveys of variables such as carbon, temperature, salinity, and water alkalinity, completed only once per decade, have been cancelled. Surface carbon measurements from ships, which tell us about the evolution of greenhouse gases, also effectively ceased.

The impacts on climate change monitoring are long-term. They are likely to prevent or restrict measurement campaigns for the mass balance of glaciers or the thickness of permafrost, usually conducted at the end of the thawing period. The overall disruption of observations will introduce gaps in the historical time series of Essential Climate Variables needed to monitor climate variability and change and associated impacts.

This report has been compiled by the World Meteorological Organization (WMO) under the direction of the United Nations Secretary-General to bring together the latest climate science related updates from a group of key global partner organizations – WMO, Global Carbon Project (GCP), UNESCO Intergovernmental Oceanographic Commission (UNESCO-IOC), Intergovernmental Panel on Climate Change (IPCC), UN Environment Programme (UNEP) and the Met Office. The content of each chapter is attributable to each respective organization.

Ecological Threat Register 2020

Understanding ecological threats, resilience and peace

The first edition of Ecological Threat Register (ETR) by the Institute for Economics and Peace (IEP) measures the ecological threats faced by 157 independent states and territories and provides projections to 2050.

The first edition of Ecological Threat Register (ETR) by the Institute for Economics and Peace (IEP) measures the ecological threats faced by 157 independent states and territories and provides projections to 2050.
Ecological Threat Register (ETR)

Topics covered in the ETR include population growth, water stress, food insecurity, droughts, floods, cyclones, rising temperatures, and rising sea levels. The report uses IEP’s Positive Peace framework to identify areas where resilience is unlikely to be strong enough to adapt or cope with these future shocks. 

The ETR places threats into two major clusters: resource scarcity and natural disasters. The resource scarcity domain includes food insecurity, water scarcity, and high population growth. At the same time, the natural disasters cluster measures threats of floods, droughts, cyclones, sea-level rise, and rising temperatures.

The ETR identifies three clusters of ecological hotspots, which are particularly susceptible to collapse:

  • The Sahel-Horn belt of Africa, from Mauritania to Somalia;
  • The Southern African belt, from Angola to Madagascar;
  • The Middle East and Central Asian belt, from Syria to Pakistan.

These countries compete for scarce resources, which creates conflict. The conflict, in turn, leads to further resource depletion. These countries are more likely to experience civil unrest, political instability, social fragmentation, and economic collapse.

While high resilience regions, such as Europe and North America, have superior coping capacities to mitigate the effects of these ecological threats, they will not be immune from large flows of refugees. Refugee influx, in turn, can cause considerable unrest and shift political systems.

There are 141 countries exposed to at least one ecological threat between now and 2050. The 19 countries with the highest number of risks have a population of 2.1 billion people. Approximately one billion people live in countries that do not have the resilience to deal with the ecological changes expected. 

The countries with the largest number of people at risk are Pakistan, with 220 million people, and Iran with 84 million people. In such circumstances, even small events could spiral into instability and violence, leading to mass population displacement, which would negatively impact regional and global security.

The countries at the highest risk also face food insecurities and crisis-level water demands.