Targeting failure: why investor climate targets don’t ensure decarbonization
Investors have increasingly adopted climate targets in response to pressure to address climate-related financial risks and to transition to a net-zero economy. This report assesses the robustness, ambition, and transparency of these targets across a sample of 83 global investors. We examined four types of investor targets: emissions, alignment, engagement, and climate solutions investment.
Key findings:
- The conclusion is clear: existing investor targets are doing little to drive down real-world emissions.
- Out of the 83 investors we reviewed, 20% lack any targets. Most investors have fewer than five targets, falling well short of what is needed for a comprehensive decarbonization strategy.
- The quality and scope of the climate targets adopted by investors fall far short of what is needed to align with global climate goals. Recurring issues include weak definitions, limited coverage, opaque metrics, and premature “achievements”.
Investors must adopt sectoral and science-based targets, strengthen their engagement and investment criteria, and ensure full transparency in disclosures.
Asset owners must lead by example by setting ambitious targets as part of a coherent climate strategy and by taking asset managers’ climate targets into account when selecting and engaging them. Regulators must also act and ensure transparent climate targets are part of robust investor transition plans.
Without actions from investors and regulators, investor targets will continue to be mainly greenwashing and investors will fail their fiduciary responsibility to manage systemic climate risk and safeguard long-term financial stability.