Climate League 2030 is a ten-year, private sector-focused initiative to support and act towards a goal of reducing Australia’s annual greenhouse gas emissions by at least a further 230 million tonnes from what is projected for 2030.
The initiative is coordinated by the Investor Group on Climate Change (IGCC) and assisted by foundational supporters Aware Super, Cbus, IFM Investors and the Queensland Investment Corporation.
Climate change risk has become a top tier issue in boardrooms because the returns, dividends and retirement savings of millions of Australians are at risk from rising emissions and a warming planet. Climate risks manifest as physical risks, such as more extreme bushfires, droughts and floods that damage assets and communities, and transitional risks that reduce the value of carbon-intensive assets, companies and infrastructure.
Concern about climate risk is also held by Australian financial regulators. The Reserve Bank of Australia has declared that our economy is already exposed to material risk from climate change, which will increase unless addressed. The Australian Prudential Regulation Authority says climate risks are material, foreseeable and actionable. And the Australian Securities and Investments Commission has found directors have a legal duty to report and consider climate risks and opportunities.
Reducing emissions in line with the overarching aims of the Paris Agreement represents the responsible economic management needed to address the systemic climate risk and secure Australia’s ongoing prosperity.
To help put Australia on a Paris-aligned emissions trajectory, investors, banks, insurers and businesses must be part of the solution. To participate in Climate League 2030 organisations must support the initiative’s goal and commit to taking at least one new action each year that will make a demonstrable contribution to reducing Australian emissions. Participants can commit actions under the following themes:
- Investing in line with the goals of the Paris Agreement
Climate League 2030 participants will need to report annually on the progress towards their existing commitments and detail how these actions are helping to reduce Australian domestic emissions. Each participant must also pledge at least one new action each year. The collective progress of the registered actions in contribution to the initiative’s goal will be reported periodically.
Climate League 2030 was launched in October 2020 starting with investor participants. Over the following 18 months it will be progressively opened to banks, insurers and companies to replicate the coverage and success of initiatives in other markets, such as We Are Still In in the U.S. and the Climate Leaders Coalition in New Zealand.
Why 230 million tonnes by 2030?
The parties to the Paris Agreement, including Australia, have committed to take collective action to ensure average global warming is kept well below 2°C above pre-industrial levels, aiming for 1.5°C. To have a reasonable chance of keeping warming to 1.5°C, the Intergovernmental Panel on Climate Change (IPCC) has identified that global emissions will need to fall by 45 per cent from 2010 levels by 2030, and reach net zero by 2050. In assessing Australia’s fair contribution to keeping global warming below 2°C, the Climate Change Authority has advised there needs to be a nation-wide reduction in emissions of 40 to 60 per cent from 2010 levels (45 to 65 per cent from 2005 levels) by 2030. A further reduction of 230 million tonnes from projected annual emissions in 2030, based on a range of government and independent estimates, would represent an approximate 45 per cent cut from 2005 levels. Climate League 2030 recognises this emissions trajectory is the minimum required to begin meeting the overarching Paris goals, significantly de-risk our economy and ensure an orderly transition to net zero emissions by 2050 that protects communities and workers.
A further 230 million tonne reduction in annual emissions by the end of the decade may not be achieved by participants of Climate League 2030 alone. But collectively they can make a significant contribution towards shifting Australia’s emissions trajectory. Together Australian investors, businesses, banks and insurers can help reduce emissions through changes in their operations, project financing and underwriting decisions, portfolio investments and company engagement. For example, listed companies are responsible for approximately 40 per cent of Australian emissions, with the superannuation industry holding a collective 20 per cent share of equity in these businesses. Investors have significant capital invested in Australian infrastructure, which is associated with 70 percent of domestic emissions.
Across these and all other asset classes there are multiple ways all financial market participants can make significant contributions to responsible climate risk mitigation and Paris-aligned emissions reductions. And in embracing this trajectory, significant new domestic investment opportunities can be created in sectors like electricity generation and distribution, transport, manufacturing and carbon sequestration, worth $131 billion over the next decade.