How fixed income investors can speed up the transition to a carbon neutral world
Toxic Bonds Initiative | 29 Nov 2022
Out of the largest 100 emitters – responsible for almost 75% of global greenhouse gas emissions – only 30 are listed on equity markets, but all are dependent on bond markets for access to capital.
Therefore fixed income investors are uniquely positioned to influence the transition to a carbon-neutral economy through their investment strategies, engagement and by raising the cost of capital for fossil fuel companies that are not on a path to transition.
The Toxic Bonds Initiative is a network of civil society organisations. We are calling on investors to:
- Adopt coal, oil and gas phase-out policies that stop all new investments in companies expanding fossil fuel output and infrastructure. These policies must cover passive holdings and third-party assets.
- For companies expanding fossil fuel output and infrastructure, investors must deny new debt and plan to divest from existing bond holdings.
- Use their position as capital providers to engage companies in advance of the bond issuance process to inform investment strategy and decisions and to set clear expectations of companies regarding their alignment to a robust 1.5˚C climate scenario
- Plan divestment from fossil fuel companies (share and bond holdings), unless the company ceases development of new fossil fuel projects and announces a complete phase-out strategy aligned with principles of equity and a 1.5˚C timeline that is certified by globally recognised science-based professionals.
Bond investors have significant power to steer the green transition. It's time this power was exercised for good.
Every time investors buy Toxic Bonds they are helping a new coal plant, or a new oil and gas pipeline come on line. It's the fuel that drives the expansionary system - but it can be put out.
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