With the Conference of Parties (COP) 26 almost upon us in November 2021, responsible investors everywhere are looking to align themselves with the international climate conference.

Climate change is already impacting economies and markets today. Left unabated, conservative estimates suggest the global costs of climate inaction are equivalent to losing between 5 and 20% of global gross domestic product each year, now and forever. Climate action has been internationally prioritised as Goal 13 of the United Nations (UN) Sustainable Development Goals (SDGs), a framework for overcoming global challenges such as poverty and public health. Achieving the SDGs requires a shift in investments of USD 5 trillion to USD 7 trillion per year until 2030, with climate-related costs of inaction valued at USD 1 trillion per year.

Climate risks have tangible financial implications for asset owners and asset managers alike, giving them a key role to play in driving progress in the transition to a low-carbon world. Companies have come under increasing pressure to align their business models with the Paris Agreement climate goals, which call for global warming to be capped at 1.5°C compared with pre-industrial levels. Many investor-led initiatives for climate-conscious investing have emerged, calling for a transition toward net-zero carbon emissions. Several of these initiatives have emerged under the auspices of the UN, and with COP 26 around the corner, asset owners and managers alike are looking to align themselves with these UN initiatives.

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