Nine investors representing $742bn of AUM have signed a joint letter urging the G20 to address fossil fuel subsidies, and seek an end to these by 2020 to reduce the associated risks that are seen overhanging the financial sector.
Aviva, CCLA Investment Management, Earth Capital, Environment Agency Pension Fund, Glennmont Partners, Joseph Rowntree Charitable Trust, Sarasin & Partners, USS and WHEB Asset Management, jointly issued a statement – https://www.odi.org/sites/odi.org.uk/files/statement_to_g20_leaders_fossil_fuel_subsidies_final_2018.pdf – in which they warn of the stranded assets in the energy sector and negative impact on competitiveness of low carbon businesses that fossil fuel subsidies lead to.
Also cited is research published by the International Institute for Sustainable Development (IISD), the Overseas Development Institute (ODI), Oil Change International (OCI), and Fundación Ambiente y Recursos Naturales (FARN), which suggests that some progress has been made by some G20 governments in moving away from supporting fossil fuels and increasing taxation of such fuels. (https://www.iisd.org/sites/default/files/publications/stories-g20-shifting-public-money-out-fossil-fuels-en.pdf). But the report also warns that the change must accelerate if the G20 is to meet targets set by the Paris Agreement and the UN Sustainable Development Goals by 2030.
Steve Waygood, chief responsible investment officer at Aviva Investors, said: “Governments beginning to take stock of their commitment to Paris are falling at the first hurdle if they refuse to factor in fossil fuel subsidies for producers – including tax concessions and placing the burden of decommissioning the sector’s infrastructure on taxpayers.”
“As corporates are being asked to disclose the potential impact of climate risk on their balance sheets, we as investors are also asking governments to disclose the impact that fossil fuel subsidies have at country balance sheet level, providing us with useful information so that we can support economies as they make this important change.”
Shelagh Whitley, head of the Overseas Development Institute’s Climate and Energy Programme, said: “The message is clear from global investors to G20 governments, fossil fuel subsidies not only lead to air pollution and climate impacts, they’re bad for business too. G20 Ministers must listen to investors and ensure that country leaders commit to a firm deadline to end fossil fuel subsidies at the G20 Leaders’ Summit in Buenos Aires this November.”
Ivetta Gerasimchuk, lead for Sustainable Energy Supplies at IISD, said: “If there is a way to stop taxpayers’ money going into the pockets of oil, gas and coal companies and rich energy guzzlers, it is through G20 countries learning from each other’s experiences: the hard-won reforms and steps forward that some have made.”