Empowering retail investors to steer the climate change debate

Aligning financial markets with climate goals
Organisation
2° Investing Initiative
Grant
DKK DKK 3,350,000
Programme Area
Sustainable Finance
Year
2018-2020

Until now, approaches to addressing this need have overlooked a powerful decision-maker – retail investors (ordinary citizen investors). Approximately EUR 1 trillion of the assets of European retail investors are financing fossil fuels, despite 70 pct. of them wanting sustainability, and in particular climate-related, criteria to be reflected in their investment portfolios (Natixis Global AM Study 2017). However, few climate-friendly retail investment options exist at the moment.

The project aims to ensure that retail investors can invest in line with their beliefs. Mobilising just 1 percent of retail investors could potentially redirect EUR 5 billion to cleaner energy. 2˚ii is partnering with the WWF European Policy Office (WWF EPO), a fellow member of the EU’s High-Level Expert Group on Sustainable Finance, to run a targeted advocacy campaign to ensure that financial advisers are obliged to advise on sustainable investment products, investors can effectively invest in fossil-free funds and that investors are aware of the climate impact of their investments. This will also encourage the development of more investment options that are compatible with a 2˚C future.

As part of its cutting-edge work, 2°ii co-initiated the first climate-related financial regulation in Europe – Article 173 of France’s Energy Transition law – which made climate change-related reporting for asset owners and asset managers mandatory. It also co-started the Swiss initiative on reporting against the Paris Agreement – involving the majority of Swiss pension funds and insurance companies – and launched the first international climate disclosure awards with the French Environment Ministry and Treasury.

2˚ Investing Initiative
The 2° Investing Initiative (2°ii) was set up in 2012 with the mission to align financial markets with climate goals. It has since become a pioneering think tank – with offices in Berlin, Paris, London and New York – on the integration of long-term risks and policy objectives into financial markets and regulatory frameworks.
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Aims of the initiative

Through this project, 2˚ii aims to:

  • Enable retail investors to invest in line with their preferences by integrating sustainability requirements into EU financial legislation;
  • Ensure climate transparency for investment products to make retail investors aware of the impact of their investments;
  • Facilitate a rapid rise in the number of Paris-compatible investment options for retail investors.
”We must now agree on a binding review mechanisms under international law, so that this century can credibly be called a century of decarbonization”
German Chancellor, Angela Merkel, Speech at the Bundestag, 2015