Banking on a better world: The finance sector’s role in climate advocacy

Financial Institutions have a unique opportunity to drive transformational change by aligning their advocacy, policy, and engagement efforts with net zero goals. This capacity to persuade forms a critical component of the Race to Zero criteria. Below, we explore how key members, from Aviva Investors to Railpen, are adopting practices that adhere to the campaign’s 5th ‘P’: Persuade. These institutions are not only establishing concrete climate action policies but also working on multiple fronts to influence and reform the wider financial landscape.

Aviva Investors, Net Zero Asset Managers (NZAM) member, is advocating for reforms needed to match the scale of the climate challenge. Their Act Now – A Climate Emergency Roadmap for the International Financial Architecture outlines clear policy asks for each of the institutions within the IFA, going beyond the Bretton Woods institutions to include the crucial regulation and supervision of global finance whilst underscoring risks to the integrity and stability of the financial system posed by the long-term physical impacts the current three-degrees-plus trajectory would produce by the end of the century.

Through InfluenceMap Insights, a small number of financial institutions, most notably Aviva, Legal & General, AXA and Nordea, are bucking industry trends and engaging on sustainable finance policy with mostly ambitious positions. InfluenceMap also maintains the world’s leading database assessing corporate climate policy engagement (LobbyMap), covering over 400 companies and 200 industry associations globally. This database feeds data and analysis to the Climate Action 100+ (CA100+) initiative. This recent AP7 climate lobbying review is also among one of the first from the financial sector.

Railpen, member of Paris Aligned Asset Owners, responded to public policy consultations in July 2022 on climate-related disclosures on risks, opportunities and transition planning, including from the UK Transition Plan Taskforce, the Glasgow Financial Alliance on Net Zero (GFANZ) and the International Sustainability Standards Board (ISSB) with a view to enhance and standardise the form and substance of climate considerations in corporate and financial disclosures.

NZ Super Fund has worked closely with the Treasury and the other Crown Financial Institutions (CFIs) to develop the Crown Responsible Investment Framework that was announced by the Minister of Finance in late 2021. This Framework includes a commitment to reporting against common carbon metrics. NZ Super Fund has reported on progress against their own commitments in detail through its 2022 Climate Change Report and has signed the 2022 Global Investor Statement to Governments on the Climate Crisis.

Signed by 603 investors globally, including and with $41 trillion USD in AUM, the Global Investor Statement to Governments on the Climate Crisis advocates for governments to enact ambitious policies that would leverage the private capital required to effectively address climate change, containing the most ambitious policy recommendations from investors to date and calling for enhanced NDC’s, effective implementation of the Methane Pledge, strengthened climate disclosure frameworks and increased climate financing – especially to developing countries.

Freedom to Invest, a statement coordinated by Ceres and We Mean Business Coalition and released in March 2023 at Ceres Global, hundreds of investors and companies are reminding policymakers that they must be free to consider all material financial risks and opportunities, including those related to the climate crisis, to plan for the long-term and build a stronger, more resilient economy.

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