The UNEP Finance Initiative, together with its founding partners of The Investor Agenda have today released a new tool to enable institutional investors to step up action to tackle the climate crisis and accelerate the transition to a net-zero economy.

UNEP FI, Asia Investor Group on Climate Change, CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change and Principles for Responsible Investment are seven major groups working with investors.

AIGCC, CDP, Ceres, IIGCC, IGCC, PRI, and UNEP FI, have been mobilizing investors to make net-zero commitments through a number of Investor Agenda-endorsed initiatives including the Net Zero Asset Managers initiative, Paris Aligned Investment Initiative, Science Based Targets initiative and United Nations-convened Net Zero Asset Owner Alliance.

The new framework - Investor Climate Action Plans (ICAPs) Expectations Ladder and Guidance - provides investors with clear expectations for issuing and implementing comprehensive climate action plans, including steps investors can take to support the goal of a net-zero emissions economy by 2050 or sooner.

The framework aims to help investors navigate existing expectations and initiatives on climate change.

The release of the ICAPs Expectations Ladder and Guidance comes amid increasing global momentum of investors committing to work with their portfolio companies and policymakers to reach net zero emissions by 2050 or sooner, and to set interim reduction targets for 2025 and 2030.

Eric Usher, Head of the UNEP Finance Initiative, said:

“We have seen tremendous growth in net-zero commitments from investors, however we need to move past commitments to concrete action and targets. UNEP FI is working with leading investors through the United Nations-Convened Net-Zero Asset Owner Alliance to cascade net-zero progress throughout the financial system and real economy, as well as with large investors who are just starting their climate action journey.

“The ICAPs Expectations Ladder and Guidance will help all investors take meaningful action, whether it is their first step or an additional enhancement, across sustainability, engagement and asset allocation.”

The ICAPs Expectations Ladder

The ICAPs Expectations Ladder summarises the key climate actions investors can take immediately in the four interlocking areas of the Investor Agenda: investment, corporate engagement, policy advocacy, and investor disclosure. Governance is a cross-cutting theme across all four areas. The areas include:

• Investment: Manage climate risks in investor portfolios and shift capital to value-creating businesses set to succeed in a net-zero future.
• Corporate Engagement: Engage companies to drive climate action and demonstrate real progress in line with a 1.5-degree Celsius future.
• Policy Advocacy: Advocate for policies aligned with delivering a just transition to a net-zero economy by 2050 or sooner.
• Investor Disclosure: Enhance investor disclosure to help stakeholders track investor climate action in line with a 1.5-degree Celsius pathway.

Investors can use the ICAPs Expectations Ladder in several ways including:

• Assessing their current approach to managing climate change risk and opportunity
• Publishing a standalone ICAP
• Embedding elements of the ICAPs into their climate change strategies and disclosures.
• Communicating their current activities and future plans to stakeholders

The accompanying ICAPs Guidance enables investors to interpret the ICAPs Expectations Ladder. It can be used by investors to self-assess where they are on the ladder to understand the specific climate actions they can take to strengthen their approach and make further progress.

The Investor Agenda will measure progress on how many investors are developing and implementing climate action plans aligned with the Expectations Ladder, with the hope that at least 50% of all major investors will issue an ICAP or incorporate elements of the Expectations Ladder into their plans, reports and strategies in the next year and that all major investors have an ICAP with net-zero targets in the next five years.

Paul Simpson, CEO of CDP and member of the global Steering Committee of the Investor Agenda, said:

“It is crucial for the business world to demonstrate leadership on climate action and readiness for bolder policy in the run up to COP26 and beyond. This means setting ambitious and credible science-based targets and seizing the power of transparency and disclosure. The ICAPs Expectations Ladder and Guidance is forward-looking. It provides clear information to the capital markets for aligning their investment portfolios with the goal of net zero emissions by 2050 or sooner. We are thrilled that this new tool is now available to investors around the world.”

Mindy Lubber, CEO and President of Ceres and member of the global Steering Committee of the Investor Agenda, commented:

“We call on all investors to publish climate action plans and join investors around the world in building a more just and inclusive net-zero economy. The ICAPs Expectations Ladder and Guidance will drive a positive climate ambition loop by sending a clear signal to investors, companies, governments and regulators that investors support ambitious climate action plans and policies, which can in turn unlock further climate action.”

Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change and member of the global Steering Committee of the Investor Agenda, added that climate change poses a serious financial risk for investors and that all investors need to take action.

Fiona Reynolds, CEO of the Principles of Responsible Investment, commented that ambition across the board was critical but without commitment and action “it won’t be enough to move the needle on net-zero.”

Click here to download the ICAPS Expectation Ladder

Click here to download the ICAPS Guidance on using the Expectation Ladder