Major investors demand more government action on net zero

The climate crisis is both a threat and an opportunity, and clear policy direction will help investors contribute to the transition to net zero, Australia’s major investors say.

Some of Australia’s largest investors are calling on the federal government to drastically overhaul its climate policy, as the nation takes steps towards net zero.

The Investor Group on Climate Change (IGCC), whose members hold more than $3 trillion in Australian funds under management, has unveiled a number of recommendations to stimulate capital and fund Australia’s move to net zero.

Among the recommendations is a slashing of Australia’s emissions by 75 per cent by 2035, far ahead of the federal government’s more modest target of 43 per cent by 2030 and net zero by 2050.

CEO of IGCC Rebecca Mikula said while many governments, businesses and investors have already committed to net zero, the biggest barrier to reaching the climate goal is the lack of stable policy supporting investment in sustainability, like zero carbon technologies.

“Governments can’t finance this transformation themselves, but they can set policies that will unlock billions in private investment,” she said.

“Climate change will be a crucial factor in beneficiaries’ long term financial returns, and the highest net economic benefit is limiting climate change damages from warming above 1.5°.”

In a new report, the IGCC notes it has “unequivocally found that investing now in climate solutions and resilience is the least-cost option”.

See more: What is the business case for sustainability?

The report reveals a number of policy priorities to help decarbonise the Australian economy, including:

• Altering our emissions reduction target to 1.5 degrees by 2035, an approximately 75 per cent reduction in emissions
• Removing fossil fuel subsidies by 2025
• Carbon pricing using the safeguards mechanism
• Creating demand for ‘green products’
• Removing barriers to investment in pre-commercial technologies
• National coordination to unlock private sector investment
• Updating building codes and land-use plans.

According to the report, aligning Australia’s emissions reduction targets to the Paris Agreement objective of 1.5 degrees would deliver “the greatest net benefit to the economy”.

To cut down Australia’s emissions so drastically, the IGCC recommends 90 per cent renewable energy generation by 2030, a phase out of coal generation by 2035 and mid-merit gas generation by 2040, and for 75 per cent of new vehicle sales to be electric by 2030.

Additionally, to support a “just and orderly” transition, the report recommends national and regional transition authorities.

The report also justifies the use of a carbon price, which it says would promote investment in new zero emissions technologies.

See more: The clean energy revolution isn’t just a techno-fix — it’s about capturing hearts and minds

It also recommends following the advice of the Climate Change Authority to “establish clear 2030, 2035 and 2040 policy goal posts for all sectors”.

Describing the climate crisis as both a threat and an opportunity, the report states that “investors are and can deploy very large amounts of capital into climate solutions across the economy”.

“The physical risks of climate are already damaging the economy and transformational adaptation measures are required,” the report says, adding that the suggestions in the report should be a “starting point… not the end”.