More than 280 global investors issue fresh plea for climate action

Number of investors calling for ambitious global climate change treaty doubles as firms with $20tr of assets under management demand action

A coalition of more than 280 of the world’s largest institutional investors has today issued a global plea for governments to take “new and meaningful steps” in their efforts to tackle climate change.

The group of 285 investors, which together manage assets worth more than $20tr, today issued a new report and statement to G20 governments calling for an urgent acceleration in the development of domestic and international low carbon policies.

The group is calling for the creation of “investment-grade policy” based around government incentives and stable policy frameworks that serve to reduce the risk associated with investing in low carbon projects.

In particular, the statement calls for the adoption of clear emissions reduction targets, the creation of financial incentives that “shift the risk-reward balance in favour of low-carbon assets”, and the development of policies that accelerate the development of low carbon technologies.

It also urges diplomats at the UN’s upcoming Durban Climate Summit to continue progress towards an international treaty, provide more detail on the proposed Green Climate Fund, and accelerate efforts to tackle deforestation.

The statement has been orchestrated by 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, alongside the United Nations Environment Programme Finance Initiative (UNEP FI), and the Advisory Council of the Principles for Responsible Investment (PRI).

According to the group, the statement represents the largest coalition of international investors, by both number and assets under management, to demand action on climate change.

The group is also double the size of the group of 150 investors that issued a similar call for climate action in November 2003.

Speaking to BusinessGreen, Ian Simm, chief executive of Impax Asset Management Group, said growing numbers of institutional investors now supported calls for more ambitious climate policies.

“There is increasing understanding and agreement amongst asset managers that in a world of seven billion people, rising to nine billion by 2050, there will be more pressure put on the planet and weak infrastructure is not going to deliver the standards of living we want,” he said. “[That means] future investment in low carbon areas is going to become more plentiful and more lucrative.”

Stephanie Pfeifer, Executive Director at the IIGCC, said that low carbon investment was largely dependent on the policy environment created by governments.

“Policy risk has a critical influence on investment in low-carbon growth areas such as renewable energy,” she said. “Attracting capital at the scale required to meet climate change goals will only be possible when low carbon investments are seen as attractive relative to higher carbon investments. Determined leadership on national and international climate and energy policy will be fundamental in shifting this risk/return balance in favour of low carbon investments.”

Paul Clements Hunt, head of UNEP FI, added that measures to drive low carbon investment could offer a means of ending the global economic downturn.

“The type of smart finance we are calling for, one that clears the way for the low-carbon economy’s vast business opportunities, could prompt the reversal of the current climate of economic insecurity,” he said. “It holds the potential to act as a major driver of growth and job creation.”

The statement was welcomed by the head of the UN climate change secretariat, Christiana Figueres, who said vocal support from private investors could help give governments “the confidence and the knowledge” to put effective low carbon incentives and policy mechanisms in place.

The move comes just days ahead of the launch of a similar call to action from the Corporate Leaders Group, which is urging businesses to sign up to its Two Degree Challenge Communiqué calling on governments to step up efforts to limit rising global temperatures.

By James Murray

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