Investors worth $13 trillion raise their voice on climate

Alejandro Litovsky

September 18, 2009

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The world’s largest global investors issued on Wednesday a joint call for strong action from U.S. and international policy makers in the fight against global warming. Its not the average communique in that it is signed by 181 investors collectively managing more than $13 trillion in assets, the investor statement is the largest of its kind on climate change in world history.

“Investors have a crucial role to play in building a low-carbon, energy efficient global economy,” said Mindy S. Lubber, president of Ceres and director of the Investor Network on Climate Risk, which co-convened the forum and which Volans profiled earlier this year as a Phoenix Economy pioneer. “But without strong policies that encourage clean technologies and discourage high-polluting technologies, their hands are tied.”

Investors released the statement at an all-day International Investor Forum on Climate Change hosted by New York State Comptroller Thomas P. DiNapoli and keynoted by British economist Lord Nicholas Stern. Amid growing focus on upcoming international climate treaty talks and Congressional debate of climate and energy legislation, this major policy statement calls for a strong and binding international treaty that can catalyze massive global investments in low-carbon technologies. Signatories to the statement include state treasurers, controllers, pension fund leaders, asset managers and foundations worldwide.

“We must chart a new course toward long-term, sustainable business practices,” said DiNapoli, head of the $116.5 billion New York State Common Retirement Fund. “We cannot drag our feet on the issue of global climate change. I am deeply concerned about the investor risks climate change presents, and the human cost of inaction is unthinkable. As investors in the global economy, we can lead the way toward a future of lasting prosperity.” The New York State Common Retirement Fund exists to provide benefits to more than one million state and local government employees, retirees, and beneficiaries. DiNapoli last year committed to investing $500 million over a three year period in green businesses. To date, the Fund has invested $200 million under DiNapoli’s Green Strategic Investment Program.

The call comes in advance of the climate negotiations in Copenhagen this December. The outcome of those climate talks depends heavily on the course of debates in the U.S. Congress on climate and energy legislation. The House passed a comprehensive bill in June and Senate consideration of a similar climate bill is expected to begin within weeks.

Investors’ interest in ecosystem services

Their ambitions include putting in place “robust measures to reduce deforestation and promote afforestation” around the world, which is arguably one of the toughest areas to advance on. This is one of the themes which the Pathways to Scale Program is interested in pioneering, given that progress in this area will require to work with leading models and entrepreneurs, such as the Katoomba Group, the Amazon Fund, and the Global Canopy Programme‘s work on ecosystem valuation, among many others developing specific solutions, to identify the barriers and blockages they face to scale, and signal the opportunity areas where large investor groups and policy-makers (who are creating specialized international funds and support programmes) can help create influential critical mass for system change.

Connecting investor groups with pioneers to co-create the necessary pathways to scale is a critical step in the transition to a low-carbon economy. Among the investor groups which should be part of such effort are the forum’s sponsors:

  • 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 80 institutional investors with collective assets totaling more than $7 trillion.
  • The Institutional Investors Group on Climate Change (IIGCC) is a forum for collaboration on climate change for European investors. The group’s objective is to catalyze greater investment in a low carbon economy by bringing investors together to use their collective influence with companies, policymakers and investors. The group currently has 56 members, representing assets of around €4trillion.
  • 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 interested in the impact of climate change on investments. 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 170 institutions, including banks, insurers, fund managers and investors, work with UNEP to understand the impacts of environmental and social considerations on financial performance.

Photo Credit: Sipa Press/Rex