Investor groups worth trillions call for price on carbon, climate deal

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Just as Australia dumps its carbon price, investor groups representing $24 trillion of funds under management call for carbon pricing across the globe, as the push for a new international climate agreement gathers pace.

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Just two months after Australia’s Abbott government achieved the dubious honour of becoming the first in the world to abolish a national carbon pricing scheme, more than 350 global institutional investors representing around $24 trillion in assets have called on government leaders across the globe to put a price on carbon, to help redirect investment on the scale required to combat climate change.

In a statement published on Thursday in New York, a message drafted through a collaboration of six investor groups warns that while the global finance sector is starting to take action on climate change, stronger government action is needed to accelerate the low carbon transition.

“Gaps, weaknesses and delays in climate change and clean energy policies will increase the risks to our investments as a result of the physical impacts of climate change, and will increase the likelihood that more radical policy measures will be required to reduce greenhouse gas emissions,” says the statement.

“Stronger political leadership and more ambitious policies are needed in order for us to scale up our investments.”

The statement – which will be presented, along with a report, to the UN climate summit in New York next week – also calls on world leaders to forge an ambitious global climate deal, as well as develop plans to phase out subsidies for fossil fuels.

“It is significant that the largest institutional investors from around the world are in agreement that unmitigated climate change puts their investments at risk,” said Mindy Lubber, director of one of the investor groups behind the statement – the Investor Network on Climate Risk – and president of US-based nonprofit sustainability advocacy group, Ceres.

“The financial community has a message for heads of state gathering at the United Nations next week: we can’t afford to wait any longer for a climate deal.”

The report recognises the role investors play in financing clean energy, outlines the specific steps they are committing to take, and calls on policymakers to take action that supports, rather than limits, investments in clean energy and climate solutions.Screen Shot 2014-09-18 at 10.40.37 PM

“The perception prevails that we need to choose between economic well-being or climate stability. The truth is that we need both,” said Achim Steiner, UN Under-Secretary-General and Executive Director of the UN Environment Programme.

“What is needed is an unprecedented re-channelling of investment from today’s economy into the low-carbon economy of tomorrow. Investors are owners of large segments of the global economy as well as custodians of citizens’ savings around the world. Having such a critical mass of them demand a transition to the low-carbon and green economy is exactly the signal Governments need in order to move to ambitious action quickly,” Steiner said.

The report also details examples of action being taken by investors who support a low carbon, climate resilient economy, to demonstrate that investors are already acting on climate change in a variety of ways.

These activities include direct low carbon investments, the creation of low carbon funds, company engagement, and reducing exposure to fossil fuel and carbon intensive companies.

In addition, the investor groups have launched a Low Carbon Investment Registry, which identifies how institutional investors like pension funds and insurance companies are directing capital towards low-carbon assets.

“The Low Carbon Investment Registry shows how investors are already supporting the transition to a low carbon economy by investing in a variety of different ways – directly into renewable energy projects, into clean energy funds, through green bonds and through the establishment of public-private-partnerships,” said Nathan Fabian, Chief Executive of the Investor Group on Climate Change.

“It gives policymakers a better understanding of how private capital is currently flowing into low-carbon investments.”

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6 Comments
  1. michael 5 years ago

    not surprising that investment houses want government driven investment in replacement infrastructure prior to the working life of previous infrastrucutre running to full term, all the while supported by a new tradeable commodity… but they are probably all doing it for altruistic reasons I guess
    if they really wanted to ‘save the world’, why wait for government? oh yeah, they need the government to increase the attractiveness of the investment through legislation and regulation before they’ll put their money in. the crocodile tears for the world are a nice touch though.

    • Patrick Linsley 5 years ago

      Well it’s probably that they understand how hard it is hard to make money on their assets……when their assets are literally underwater.

    • Catprog 5 years ago

      Or they want to have certainty before investing?

  2. Chris Fraser 5 years ago

    Altruism might be a motivator … but we’re not sure many of them would be altruistic at the cost of absolutely everything else (thus the aid of environmental legislation would help). My take on that is certain groups with an interest in investment are taking a very long view, and have their sights set on a truly sustainable business environment, helped by what they perceive as a sustainable natural environment.Eventually, the majority conforming groups will have to consider what sanctions they heave onto economies that step outside the business norm.

  3. Kinamaste 5 years ago

    It’s not government investment they want – it’s policy certainty. As Chris said, private enterprise takes a much longer (and profit driven, let’s be honest) view. The amounts of money they risk because politicans can’t think past their own 3-4 year terms is vast. Business and industry know where the future lies and what is best for them (and us, mind you, if you like the goods or services they are providing). Government just needs to get with the program.

  4. Alen 5 years ago

    Is there any noise from Norway’s pension wealth fund in any of this? I know the last vote was a negative outcome but I thought they planned on having another review some time soon, and considering China’s strategy to reduce coal consumption (including the introduction of national ETS) is not time for them to finally to divest from coal and boost it’s investments into clean energy technologies. My guess is that a move away from coal by the Norwegians would irreversibly cripple the coal industry.

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