Investors worth $12trn (€11trn) have urged G7 finance ministers to push for a long-term carbon reduction goal as part of the UN climate change conference in Paris, for the first time endorsing a cut in emissions.

In a letter backed by 120 investors – including the Swedish AP funds, the UK’s BT Pension Scheme, the Church Commissioners for England, ATP and ABP – the signatories argued that the right signals from policy makers could attract investment to low-carbon projects, reducing the economic damage posed by climate change.

It also called for “well-designed” policies that moved the current investment incentives offered from the high to low-carbon intensive industries.

“Delaying action will require more stringent policies later if we are to remain within the 2°C emissions budget, exacerbating risks associated with energy investments and potentially stranding assets,” investors warned finance ministers.

The letter came ahead of the G7 meeting of finance ministers in Dresden, with host nation Germany placing climate change at the heart if its presidency ahead of the UN Climate Change Conference in Paris this December.

Signatory Philippe Desfossés, chief executive of the French supplementary civil service scheme (ERAFP), argued that a united front on climate change would allow investors to know they would be “supported, not harmed, by future policies”.

Desfossés also backed the letter’s desire for national emissions pledges and actions plans on a country-by-country basis.

“A low carbon future is an imperative. Delaying strong policy on climate change would be a false economy.”

A similar letter last year, also backed by members of the Institutional Investors Group on Climate Change, its American, Asian and Australian sister organisations, as well as the Principles for Responsible Investment, argued climate policy gaps were holding back low-carbon investment.