World investors warns a new global climate deal must be “strong and binding”
More than 130 leading investors, representing assets worth US$6.4 trillion, this week warned world leaders that any global agreement on climate change must be strong and binding to guarantee necessary financing for global emissions reduction and adaptation efforts, and that the financial crisis should not delay efforts to address rising global temperatures.
In a joint Statement sent to Heads of State and climate negotiators, investors called for a strong, binding framework to succeed the Kyoto Protocol, warning that clear and long-term policy signals are essential if investors are to allocate the huge amounts of private capital required to fund the transition to a low-carbon economy.
The Statement was sent by some of the world’s largest asset managers and pension funds, collectively representing $6.4 trillion in assets. It was co-ordinated by three leading investor groups on climate change (the US-based Investor Network on Climate Risk (INCR), the European Institutional Investors Group on Climate Change (IIGCC), and the Investors Group on Climate Change (IGCC) in Australia and New Zealand).
Peter Dunscombe, Chairman, Institutional Investors Group on Climate Change, said that: “We are urging world leaders to provide the policy framework that will help investors drive the financial flows necessary to address this urgent crisis. A strong global agreement will provide companies, governments and investors with the incentives to act quickly and efficiently in tackling climate change”.
The investors believe that the downturn in the global economy should not delay an international agreement on climate change, and that the agreement must be concluded by the end of 2009. As investors with diversified portfolios, they are concerned about the impacts of climate change on investments in individual companies and other asset classes such as property and the global economy as a whole.
Mindy Lubber, Ceres President and Director of the Investor Network on Climate Risk said, “The climate crisis is a multi-generational challenge that requires strong national and international policies immediately. World leaders must shun the excuse that it is too expensive to act to curb global warming. It is too expensive not to act.”
The Statement outlines in detail what investors are looking for from policymakers in order to allocate capital in a way that supports both the transformation to a low carbon economy and the development of adaptation measures. This includes:
- A binding global target for reducing greenhouse gas emission reductions informed by the latest available scientific evidence for avoiding dangerous climate change (which suggests that global greenhouse gas emissions must decline by 50-85% by 2050 against a base year of 2000);
- Long and medium-term emission reduction targets for developed countries which will be backed up by effective national action plans;
- Contributions from developing countries, initially in the form of national action plans focused on energy efficiency commitments, but with the ultimate aim of absolute emission reductions;
- Continuity in the legally binding framework underpinning the carbon markets and provisions for an expanded and more liquid global carbon market;
- A review, reform, and expansion of the Clean Development Mechanism;
- Clear measures to reverse deforestation and value forests as carbon sinks;
- A commitment to adaptation in order to prepare for, and respond to the physical impacts of climate change.
- Bob Welsh, Chair IGCC (Australia/New Zealand), said that, 'As global greenhouse gas emissions continue to soar and scientific indicators increasingly point towards outcomes that are beyond predicted worst case scenarios, it is vital that governments internationally take a strong position to address climate change. Even in the face of uncertain economic times the international community must unite and act to avoid dangerous climate change impacts.'
Johan van der Ende, CIO PGGM Investments, said that, “A global policy framework addressing climate change is vital to global investors. Such a firm framework will help us to address climate change risks in our investment decisions and find opportunities for climate friendly investments. This global investor statement is a strong signal of asset owners, which should contribute to firm global steps towards tackling climate change risks.”
Jack Ehnes, Chief Executive Officer, California State Teachers' Retirement System said that “The interdependency of the world’s economies is now painfully clear in this crisis driven in part by those reaching for short-term, quick profits. CalSTRS takes the long view and understands the danger of climate change to our members retirement security. The path to global financial recovery must include a coordinated effort to assess climate risk and take steps to mitigate that risk.”
Mike Taylor, CEO London Pensions Fund Authority said that “As institutional investors, we are concerned with the risks presented by climate change to the global economy and to our diversified portfolios. We are therefore urging world leaders to implement strong and effective policies to support us in allocating capital towards low carbon investments'.
Anne Kvam, Global Head of Corporate Governance, Norges Bank Investment Management, said that “The global portfolios managed by NBIM are exposed to the economic effects of climate change. Like other diversified investors NBIM is therefore interested in efficient mitigation and adaptation to climate change. A global agreement is the necessary first step.”
The Investor Statement on a Global Agreement for Climate Change has been sent to lead climate negotiators, legislative and parliamentary leaders, and Heads of State. The Statement, ahead of The United Nations Climate Change Conference scheduled for December 1-12, in Poznan, Poland, has been timed to show the importance that the investment community attaches to a timely and strong global agreement.
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