Geneva / Nairobi, 16
November 2010 - The world's largest global
investors have
a powerful message for governments and policy-makers
around the world as well as climate negotiators
in Cancun: take action now in the fight
against global warming or risk economic
disruptions far more severe than the recent
financial crisis.
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
technology.
The statement was signed
by more than 259 investors from Asia, Africa,
Australia, Europe, Latin America and North
America, with collective assets under management
totaling over US$15 trillion-more than one-quarter
of global market capitalisation. As well
as global giants Allianz and HSBC, signatories
also include investment organizations from
many developing countries and emerging economies,
including South Africa, Nigeria and Brazil.
It is the largest-ever group of investors
to call for government action on climate
change.
"We cannot drag
our feet on the issue of global climate
change," said Barbara Krumsiek, Chair
of the UN Environment Programme Finance
Initiative and CEO of US-based investment
firm Calvert Investments. "Calvert
is deeply concerned about the devastating
impacts climate change - if left unaddressed
- will have on the global economy. Based
on the Stern Report, we know these impacts
could reach global GDP cuts of an unimaginable
20% per year. Why should we take that risk?
The solutions are quickly emerging and we
must deploy these solutions to help secure
the innovation and sustainable growth our
economies need."
Today's statement comes
in advance of key negotiations in Cancun,
Mexico, beginning on 29 November, to agree
on a new international climate change regime
to substitute the Kyoto Protocol.
Investors are aware that
the developing world plays a crucial role
in the global response to climate change.
Not only will it be hit hardest by the physical
impacts of climate change, but developing
countries and emerging economies will also
have to increasingly reduce the carbon intensity
of their economies if the world is to effectively
keep temperature increases to a maximum
of 2 degrees Celsius. This will require
additional capital investments which investors
can provide if post-Kyoto certainty at the
global level is combined with sound policy
frameworks locally as well as international
instruments to de-risk low-carbon investments
in these countries.
While low-carbon global
investment is increasing, especially in
Asia, investors say substantially more private
capital would be available for renewable
energy, energy efficiency and other low-carbon
technologies, if stronger policies were
in place. Global clean energy investment
is expected to eclipse $200 billion in 2010,
up slightly from 2009 but substantially
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 warming to below 2 degrees.
Reflecting its weaker
policies, North America lags well behind
Europe and Asia in clean energy investing,
supporting US$20.7 billion in renewable
energy projects in 2009, in comparison to
$43.7 billion for Europe and US$40.8 billion
for Asia, according to a recent report by
the United Nations Environment Programme
(UNEP). The gap has increased this year,
with the U.S. investing only US$4.4 billion
in third-quarter 2010 while China's investments
topped US$13.5 billion and Europe US$8.4
billion.
"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. These experiences also show
how such policies can bring technologies
down the cost curve and eventually strengthen
their competitiveness.", said Ole Beier
Sørensen, Chairman of the Institutional
Investor Group on Climate Change and chief
of Research and Strategy at the Danish pension
fund ATP, with EUR56 billion in assets.
Investors had a particularly
sharp message for the new U.S. Congress.
"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,"
said Jack Ehnes, CEO of the California State
Teachers' Retirement System (CalSTRS) the
second largest public pension fund in the
US. "The nation's leaders should take
the cue from California, where strong clean
energy policies have spurred American innovation
and created thousands of jobs."
"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,"
said Donald MacDonald, trustee, BT Pension
Scheme, and chair, Principles for Responsible
Investment. "Deferring climate change
agreement adds to investor concerns that
climate change risks and costs are not taken
seriously. The Cancun 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."
The 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.
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. Developed countries vowed at
that time to channel up to $100 billion
a year of climate finance from multiple
sources by 2020, including $30 billion of
"fast-start" funding from 2010
to 2012.
Other areas where investors
hope to see agreements or progress in Cancun:
The financial architecture
(access, governance, etc) of climate funding,
which will facilitate a greater role for
private investment;
A rapid timeframe for
implementation of efforts to reduce emissions
from deforestation and forest degradation
(REDD) and REDD-plus);
Robust measurement,
reporting and verification (MRV) to increase
confidence in national climate policies
Expanding and deepening
the international carbon market, including
greater clarity on the future interplay
of the Carbon Development Mechanism (CDM),
Joint Implementation (JI) and emerging crediting
mechanisms such as Nationally Appropriate
Mitigation Actions (NAMAs) and REDD-plus;
Support for the creation
of well-functioning markets in developing
countries for energy efficiency and renewable
energy to accelerate effective large scale
deployment of those technologies;
A clear mandate to adopt
a legally binding agreement next year at
COP 17 in South Africa.
Ceres is a leading coalition
of investors and environmental groups working
with companies to address sustainability
challenges such as climate change. Ceres
also directs the Investor Network on Climate
Risk, an alliance of 90 institutional investors
with collective assets totaling $9 trillion.
The Institutional Investors
Group on Climate Change (IIGCC) catalyzes
greater investment in a low carbon economy
by bringing European investors together
to use their collective influence with companies,
policymakers and investors. The group currently
has 56 members, representing assets of around
4 trillion Euros. Contact: Clare Allison,
Capital MSL +44 (0) 20 7307 5342
The Investor Group on
Climate Change Australia/New Zealand (IGCC,
Australia/New Zealand) represents institutional
investors operating in Australia and New
Zealand, with assets around A$500 billion,
and others in the investment community.
The IGCC aims to ensure that the risks and
opportunities associated with climate change
are incorporated into investment decisions
for the ultimate benefit of individual investors.
The United Nations Environment
Programme Finance Initiative (UNEP FI) is
a global partnership between UNEP and the
financial sector. Over 190 institutions,
including banks, insurers and fund managers,
work with UNEP to understand the impacts
of environmental and social considerations
on financial performance. Through its Climate
Change Working Group (CCWG), UNEP FI identifies
the roles of the finance sector in addressing
climate change, and advances the integration
of climate change factors - both risks and
opportunities - into financial decision-making.
This is done through a comprehensive work
programme encompassing research, training,
events and regional activities. For more
information, please visit: www.unepfi.org
Principles for Responsible
Investment (PRI)
Principles for Responsible
Investment, convened by UNEP FI and the
UN Global Compact, was established to help
investors achieve better long-term investment
returns and sustainable markets through
improved analysis of environmental, social
and governance issues. The Initiative has
over 800 signatories from 45 countries with
more than $ 25 trillion of assets under
management.
