Climate Finance Policy Engagement Analysis
Climate Lobbying Overview: The Institutional Investors Group on Climate Change (IIGCC) is advocating for ambitious climate-related policy, particularly in the EU and the UK.
Top-line Messaging on Climate-Related Financial Policy: IIGCC has been vocal in its support of aligning finance with the Paris Agreement in a 2023 open letter, and the EU's 2050 net-zero target in a July 2024 statement. IIGCC has also been very supportive of regulatory efforts on sustainable finance in the EU in July 2024 and in May 2024 in the UK, advocating for policy frameworks that unlock investment to address the climate crisis.
Position on Regulated Corporate Climate Disclosure: IIGCC has been supportive of ambitious climate-related disclosures. In a 2023 response to the International Sustainability Standards Board (ISSB) Consultation on Agenda Priorities, IIGCC advocated for further ambition on the ISSB’s climate disclosure standards, including a double materiality approach and increased disclosure of transition plans. IIGCC has been supportive of proposals by the Transition Plan Taskforce (TPT) in the UK on a framework for transition plans in 2022 and 2023, however, it cautioned against some of the disclosure elements proposed including the relative materiality of the different components and some of the sub-elements. In comments to the European Financial Reporting Advisory Group (EFRAG) in 2022, it offered strong support for the climate standards proposed under the European Sustainability Reporting Standards (ESRS) but highlighted that the granularity could “impose burdens and challenges”. Furthermore, in July 2023 IIGCC expressed concern about the reduced ambition of the ESRS and advocated for mandatory related climate disclosures and in a December 2023 response to the European Commission's consultation on the ESRS, IIGCC advocated for the adoption of sector-specific standards. IIGCC has also been supportive of climate disclosure regulation in the US, expressing its support for Scope 3 emissions disclosures and advocating for its inclusion in the SEC climate disclosure rules in a February 2024 website briefing.
Position on Taxonomies: In multiple letters to the EU Commission in 2022, the IIGCC actively supported the scientific basis of the EU taxonomy, opposing weakening the policy with the inclusion of unabated natural gas. In April 2024 IIGCC expressed support for a taxonomy with science-based criteria of only 1.5C aligned activities. Similarly, the IIGCC has been a strong proponent of a UK Green Taxonomy with rigorous, science-based criteria in 2022 feedback to the UK Government, in a 2022 joint letter to the UK Prime Minister, and in 2022 comments from its Chair, Faith Ward. In May 2024 IIGCC advocated that policymakers ‘swiftly deliver’ the UK Green Taxonomy and a July 2024 briefing described it as ‘long-delayed’.
Position on Climate Standards, Labels, and Benchmarks and ESG Ratings: In a December 2023 response to SFDR consultation, the IIGCC expressed support for the creation of a product labelling regime. In April 2024 the IIGCC advocated for a detailed product categorization system in the EU, including transition focused product labels and mixed funds. In a January 2023 response to the Financial Conduct Authority (FCA) the IIGCC supported policy on climate labels in the UK.
Position on Incorporating Climate Factors into Investor Duties: The IIGCC has advocated for the revision of the Shareholder Rights Directive (SRD II) in the EU to embed climate factors more explicitly within the definition of stewardship, in both April 2024 and June 2024. IIGCC has generally supported the Sustainable Finance Disclosure regulation (SFDR) and was supportive of most elements proposed under the 2023 review but highlighted the need to align disclosures with the ESRS. In feedback to UK regulators during 2022-2023, the IIGCC also showed strong support for draft guidance on stewardship aligned with climate and the net-zero transition, as well as alignment with trustees preferences in pension funds. In 2022 response to the Financial Conduct Authority (FCA) on the Sustainability Disclosure Requirements (SDR) for asset managers and asset owners, and in its 2023 response it suggested a more flexible approach to disclosure than the SFDR and emphasized the need for adequate phasing of disclosures.
Position on Incorporating Climate Factors Into Risk Management/Prudential Regulation: In a March 2024 response to the Basel Committee on Banking Supervision, IIGCC supported incorporating climate-related risk into Basel Pillar 3 disclosures, including disclosure around climate stress testing and portfolio transition plans. IIGCC also argued for the inclusion of the financial sector within the scope of the EU Corporate Sustainability Due Diligence Directive (CSDDD), in a December 2023 paper.
Position on Real Economy Climate Policy: IIGCC has strongly supported greenhouse gas emissions targets, including the EU ‘Fit for 55’ targets in a June 2024 corporate website post and has advocated for the EU to set an emission reduction target of at least 90% by 2040 in a March 2024 joint letter. This joint letter also called for energy efficiency legislation and circular economy regulation. In June 2024 IIGCC supported both EU energy efficiency targets and carbon tax policy.
Position on Energy, Industry, and Land Transitions: IIGCC has strongly supported the transition of the energy mix, including a statement in February 2024, a March 2024 joint letter and a May statement advocating for the removal of fossil fuel tax incentives and halting the issuance of new oil and gas licenses in the UK. It has also supported the EU’s renewable energy standards in both May 2024 and June 2024.