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The recent COP26 conference has raised awareness among investors about how their financial choices can help the planet
COP26: THE ROLE OF INVESTORS IN DRIVING ENVIRONMENTAL REFORM WITH the UN bringing world leaders together at the COP26 conference in Glasgow, Scotland in November, the finance sector played an integral role in the discussions for the first time, with net zero emissions at the centre of climate talks. Central to the discussions at COP26 was the debate regarding a transition to net zero carbon emissions that is supportive of developing markets. A survey by asset manager Ninety One found that 71% of investors felt that richer countries should be helping poorer countries to transition to net zero. However, there was a lack of confidence in the outcomes produced by COP26: 57% of respondents did not believe they would lead to global alignment on tackling climate change. The lack of high-profile leadership from China and Russia has made it even more difficult to achieve, according to 69% of investors surveyed. Hendrik du Toit, founder and
chief executive of Ninety One, says: “There is a sobering and incontrovertible fact about the drive to net zero: any effort that does not work for the world’s 7.9 billion people, most of whom live in emerging markets, will fail everywhere. To really save the planet we must help emerging markets go green. After all, emerging economies are not responsible for the bulk of emissions to date. Rather, OECD member countries are responsible for three-fifths of cumulative historic emissions. That’s seven times more than the rest of the world on a per capita basis.” The survey found that investors prefer to follow an inclusive transition approach to achieve net zero emissions instead of simply divesting from high-emitting countries and industries. In fact, 45% of all investors prefer for their investments to help companies, sectors and countries transition away from a reliance on carbon,
with only 36% supporting divestment. However, these preferences have hardened slightly since an earlier survey, where only 30% preferred divestment. Du Toit said: “To divest is irresponsible and simply demonstrates a lack of either understanding, awareness or transparency regarding the climate crisis. We must focus on long-term transition plans consistent with net zero by 2050 for companies and countries, not near-term reductions.” What is clear is that many investors feel that reducing carbon emissions will produce compelling investments, with 40% stating that they are happy for their money to influence decarbonisation while also expecting a competitive financial return. “Although the private sector cannot solely provide the kind of incentives needed, we must drive the early momentum of the intended transition and provide
