Climate Event Season: Making the case for an enabling policy environment

Between Climate Week in New York, COP16 in Colombia, and COP29 in Azerbaijan, we are entering what one could call ‘Climate Event Season’. The ongoing, indeed increasing, cadence of landmarks in the global calendar dedicated to climate is a strong signal that climate change remains the most defining issue of our time – for investors, policymakers and the myriad of other organisations active in our space. 

People sometimes question the significance – and impact – of these global gatherings. So as I prepare to head to New York, I wanted to take a step back and outline why our presence and engagement at these forums is more important than ever.  

The impetus for action remains as strong as ever. History will show that those that stayed the course did the right thing for their businesses, their beneficiaries, the wider sector and the planet.

Evolving challenges

We live in interesting times. From ongoing geopolitical conflict to a challenging economic backdrop, we are all having to navigate an ever-evolving and complex landscape. And in the midst of all of this, we must acknowledge at least the perception that the narrative on climate has shifted. 

Increasingly, we’ve seen populist political voices seek to discredit the call for climate action, taking advantage of the growing exhaustion among their electorate of the pervasive ‘doom and gloom’ narrative associated with climate change. And with many of these voices represented in this year’s elections, that narrative has found a platform. Indeed, it’s hard to mobilise people on an issue that will play out over decades, when their immediate concerns are whether they will be able to pay their bills at the end of the month.  

A rapidly closing window

Of course, the reality when it comes to climate change is that there has never been a more pressing need for action than in this moment. In the words of the UN Secretary General, “the battle for 1.5 degrees will be won or lost in the 2020s.” We have a rapidly closing window to secure the future of our societies and economies around the world. The impetus to move towards a truly global solution has never been greater.  

And I’m pleased to say that within our industry, that much-needed action has already started. Whilst it might be early days still, it’s important to take stock of the notable progress we’ve achieved to date on addressing climate risk. We’ve seen the global financial architecture take steps to mobilise in support of investor climate action, and in turn investors have begun to respond on a systemic basis. Progress is happening – too slowly, it must be said – but we are making headway.   

Investor action through initiatives

We’ve witnessed this progress through the set-up of large-scale global initiatives like the Glasgow Financial Alliance for Net Zero for example, through individual and sector-specific initiatives like the Net-Zero Asset Owner Alliance and the Net Zero Asset Managers Initiative, and through PRI’s own work such as the nature-specific focus of our Spring initiative – to name but a few of the fora where tangible action is happening.   

All of these initiatives bring together investors to amplify the impact of their work through the power of collaboration. All have seen investors commit to and begin to take action on climate and nature issues that stand to have a transformative impact on the industry and on the wider market. And, vitally, all of this action is geared towards safeguarding investors’ ability to do work – in keeping with their fiduciary obligations to deliver value – and to do so for decades to come.   

Achieving the transition

Let me be clear, the work is not done. We must ensure these commitments translate into action. The investor community has a central role to play in the transition, but we can’t do it alone. We need policymakers to set the tone and help us move towards a way of working that is conducive to the change we so desperately need to achieve. This is feedback we heard directly through our signatories, and have shaped into one of four pillars underpinning our new strategy. 

So our message to policymakers as we move through a busy schedule of events in the coming months is this: the industry needs to see the advent of a truly enabling policy environment if we’re to move to the next stage in the journey. It’s good business for everyone.  

The importance of policy engagement

For investors, it’s not just about having an environment that is conducive to funding the transition. It’s also about ensuring organisations are better placed to navigate the risks – and realise the benefits – of this transition. So ultimately it’s better for returns, and in line with investors’ fiduciary duties. For policymakers, it’s about enabling private markets to act themselves, so that climate commitments can be met and social and economic benefits unlocked. 

So we’ll be using our platform at upcoming global events to engage directly with policymakers and standard setters, in keeping with the needs of our signatories, to advocate for the change the industry needs to unlock climate action and play its part in accelerating the transition. 

These recommendations directly reflect the needs of our global signatory base and, if enacted, would serve to provide a strong foundation to enable investor activity. By playing an enabling role in directing private finance towards climate-positive ends, policymakers will be better able to meet their nationally defined climate targets, while also helping to benefit economies and societies around the world.    

We understand these changes are sometimes difficult. And coupled with the aforementioned political pushback – manifesting in outright attacks on investor action in some markets – we know that investors face hurdles. But the impetus for action remains as strong as ever. History will show that those that stayed the course did the right thing for their businesses, their beneficiaries, the wider sector and the planet. And the PRI’s commitment to our shared mission of building a sustainable financial system – which benefits investors, their clients and beneficiaries, and wider society – is unwavering.    

If you want more detail about what we’ll be attending over the coming months, keep an eye on this page  of our website which will be regularly updated. And if you’re planning on attending, please reach out so we can connect and exchange ideas – we always want to hear your views. We look forward to reflecting and reporting back.