Global Investors Call For Government Action On Climate Change

Nov 16: According to a release from the United Nations, the world risks economic crises larger than the recent global financial disruption unless governments, policy-makers and delegates to the forthcoming UN conference on climate change take action to combat global warming, major investors warned today. Nearly 260 investors from Asia, Africa, Australia, Europe, Latin America and North America, who collectively have assets valued at $15 trillion, said in joint statement that the potential climate-related gross domestic product (GDP) losses could soar up to 20 per cent by 2050 as a result of climate change. Citing the economic benefits of shifting to low-carbon and resource-efficient economies, they called for national and international policies that will spur private investment into green technology.

    Barbara Krumsiek, Chair of the UN Environment Programme (UNEP) Finance Initiative and Chief Executive Officer of the U.S.-based Calvert Investments said, "We cannot drag our feet on the issue of global climate change. Calvert is deeply concerned about the devastating impacts climate change -- if left unaddressed -- will have on the global economy." The statement was released ahead of the climate change conference in Cancún, Mexico, which will open on November 29 with the world trying to agree on a new international climate change regime to succeed the Kyoto Protocol to the UN Framework Convention on Climate Change (UNFCCC) under which industrialized countries committed themselves to a reduction of greenhouse gases.

    The UN release indicates that while low-carbon global investment is increasing, especially in Asia, the investors said more private capital would be available for renewable energy, energy efficiency and other low-carbon technologies, if stronger policies were adopted. They said that global clean energy investment is expected to rise to $200 billion this year, which is far less than the roughly $500 billion that Bloomberg New Energy Finance and the World Economic Forum says is needed per year by 2020 to restrict global warming to below 2 degrees.

    The UN said that North America lags well behind Europe and Asia in clean energy investment, having committed $20.7 billion in renewable energy projects in 2009, compared to $43.7 billion for Europe and $40.8 billion for Asia, according to a recent UNEP report. Ole Beier Sørensen, chairman of the Institutional Investor Group on Climate Change and chief of Research and Strategy at the Danish pension fund ATP said, "A basic lesson to be learned from past experience in renewable energy is that, almost without exception, private sector investment in climate solutions has been driven by consistent and sustained government policy. Experiences from countries such as Spain, Germany and China show how structured policies can bolster investor confidence and help drive renewable energy investments."

    Citing potential climate-related GDP losses of up to 20 percent by 2050 and the economic benefits of shifting to low-carbon and resource-efficient economies, investors released a major statement today calling for national and international policies that will spur private investment into low-carbon technologies. The statement was signed by 259 investors from North America, Europe, Asia, Australia, Latin America and Africa with collective assets totaling more than $15 trillion -- more than one-quarter of global capitalization. Signatories included Allianz, HSBC, APG and a dozen U.S. public pension funds and state treasurers. It is the largest-ever group of investors to call for government action on climate change.

    Mindy Lubber, president of Ceres and director of the Investor Network on Climate Risk said, "Current investment levels fall well short of what is needed to stem the rise of global temperatures and adapt to a warming world. Strong government policies that reward clean technologies and discourage dirty technologies are essential for closing the climate investment gap and building a low-carbon global economy."

    U.S. investors had a particularly sharp message for the new U.S. Congress. Jack Ehnes, chief executive officer of the California State Teachers' Retirement System, the nation's second largest public pension fund with $141 billion in assets said, "Climate change may be out of vogue in Washington today, but it poses serious financial risks that are not going away and will only increase the longer we delay enacting sensible policies to transition to a low-carbon economy. The nation's leaders should take the cue from California, where strong clean energy policies have spurred American innovation and created thousands of jobs."

    The investors' statement calls for the following domestic policies in both developed and developing countries:

• Short-, mid- and long-term greenhouse gas reduction targets
• Energy and transportation policies to accelerate deployment of energy efficiency, renewable energy, green buildings, clean vehicles and clean fuels;
• Strong and sustained price signals on carbon emissions and well-designed carbon markets;
• Phase out fossil-fuel subsidies, as agreed to by G-20 leaders in 2009;
• Adaptation measures to reduce unavoidable climate change impacts, and;
• Corporate disclosure of material climate-related risks.

    The investors said in a release, "While no comprehensive agreement is expected, investors are hoping for some forward movement during the international negotiations in Cancun. Among the investors' key priorities is delivery of promised fast-start climate financing, consistent with pledges at last year's UN climate negotiations in Copenhagen. The US and other developed countries vowed at that time to channel up to $100 billion a year of climate finance from multiple sources by 2020, including additional $30 billion of 'fast-start' funding from 2010 to 2012."

 

    Donald MacDonald, trustee, BT Pension Scheme, and chair, Principles for Responsible Investment said, "This statement shows investors are serious about the risks posed by climate change and the importance our community places on action by government to reach a global agreement. Investors need greater policy certainty from governments. Deferring climate change agreement adds to investor concerns that climate change risks and costs are not taken seriously. The Cancún talks provide an opportunity for all concerned governments to take leadership on this important issue and start framing an agreement needed to create a sustainable investment environment."

 

    Access a release from the UN (click here). Access a release from Ceres (click here). Access the 10-page 2010 Global Investor Statement on Climate Change (click here). Access the press conference audio (click here).