On Tuesday 14 September, we, along with a group of global investors representing just over $2.5 trillion in assets under management or advice, wrote to Alok Sharma, President of COP26, to request support for our position paper on the need for governments to set a timeline for net-zero accounting.
The Paris Agreement calls for “finance flows consistent with the pathways towards (...) climate-resilient development”. For this to be delivered, companies’ financial statements must be aligned with a 1.5°C-pathway.
Based on current scientific understanding, this means companies’ accounts should consider the global transition towards net-zero greenhouse gas emissions by 2050. Likewise, for governments that have committed to achieve net-zero emissions by 2050, net-zero aligned accounting is an essential policy lever without which efforts to redirect private capital flows will be severely hampered.
Global institutional investors representing over $100 trillion in assets have been calling on companies and auditors to deliver net-zero aligned accounts since last year. As we approach COP26, governments should set a clear and urgent timeline for companies to produce accounts and audits that consider the global transition onto a 1.5°C pathway.