Institutional investors representing over $52 trillion in assets are ramping up pressure on governments to phase out coal-fired power plants and fossil fuel subsidies while calling on leaders to keep global temperatures from rising past 1.5 degrees Celsius above pre-industrial times.

The call from The Investor Agenda is the largest such initiative to date and covers more than half of all institutional investments globally, organizers say. In all, 733 pension funds, banks, insurance companies and investment management firms signed on to the statement urging nations to boost ambitions ahead of the critical COP26 climate summit in Glasgow, Scotland.

To what degree the asset managers will sway the world's leaders to move away from fossil fuel is uncertain, however. Some observers also noted that the investors themselves remain heavily invested in coal, oil and natural gas — or support U.S. trade organizations that have been resisting the Biden administration's climate agenda.

"This is a really good start, but I caveat that by saying that it's more complex," said Lisa Sachs, a professor and director of the Columbia Center on Sustainable Investment. "The asset managers are saying, 'government, we need action,' but why is the government not taking action? It's because all of the companies, with their portfolios, are directly or indirectly, through their trade associations and otherwise, thwarting bold climate action."

In their statement, the asset managers focused on ending fossil fuel subsidies, a phase-out of coal generation, a "robust" price on carbon, strengthened commitments under the Paris Agreement on climate change and mandatory climate risk disclosure requirements. Those things are important but fall short of the economy-wide changes those asset managers should, but will not, push for, Sachs said.

Others believe policymakers need to put the right pieces in place for investors to be able to move. The collective muscle of the 733 asset managers sends a clear signal to governments to enact laws and regulations that reduce investor risks, said Rev. Kirsten Spalding, a senior program director of the Ceres Investor Network, a partner with The Investor Agenda.

"I think the investors at this point are saying, 'get the disclosures, get the signals right, work on a price on carbon. And we, the investors will move the private markets,'" Spalding said. "Companies also need the policy signals."

Spalding also believes the asset managers will make a mark at COP26 and beyond. The investor statement has already received some attention within the Biden administration, and Spalding would expect it to come up in the upcoming climate negotiations in Glasgow, which kick off Oct. 31.

"At this scale investors can have an influence," Spalding said.

Alok Sharma, president of the upcoming climate meeting known as COP26, said in July that he wants nations to "consign coal to history." In recent days it became clear, however, that financial leaders from G-20 nations who will gather in Rome on Oct. 30, just ahead of COP26, are nowhere near an agreement to do away with coal.

The world's largest 20 economies account for 80% of global greenhouse gas emissions and hold the key to changing the planet's trajectory toward what the U.N. has called "catastrophic" warming.

Keeping an eye on investors

In the investment world, meanwhile, companies are jumping on the net-zero bandwagon.

Just this week, investment banking giant The Goldman Sachs Group Inc. announced that it joined the Net-Zero Banking Alliance led by the U.N. that now represents more than one-third of banking assets worldwide. The companies that signed on commit to transitioning their investments away from fossil fuels to become carbon-neutral by 2050.

But questions have arisen over the guidelines that the U.N. set for the alliance, which only require banks to set targets for on-balance sheet investments while making underwriting optional. That means a significant portion of their fossil fuel financing will not be accounted for in the bank's net-zero goals.

To ensure that corporate net-zero pledges are meaningful, The Investor Agenda and other initiatives are gathering commitments from signatories that they set short-term carbon reduction goals and also submit climate action plans, "so we'll know exactly what the investors are doing," Spalding said.

A spokesman for Goldman Sachs said the firm is "very much committed to the transition to a net-zero economy" and will align its portfolios accordingly. Goldman Sachs CEO David Solomon also said the shift will be gradual and in tandem with policy changes.