Institutional Investors Call For Price on Carbon, End to Fossil Fuel Subsidies

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More than 345 global institutional investors, which represent more than $24 trillion in assets, are calling on governments to put a price on carbon and phase out fossil fuel subsidies.

Governments should also develop an ambitious global agreement on climate change by the end of 2015 to give investors the confidence to accelerate investments in low-carbon technologies, energy efficiency and climate change adaptation, said the four coordinating investor groups.

We are particularly concerned that 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,” the investors said.

Stronger political leadership and more ambitious policies are needed, they said, adding well-designed policies would encourage significantly more investment in renewable energy, energy efficiency, sustainable land use and climate resilient development.

Their statement said there is a significant gap between the amount of capital that will be required to finance the transition to a low-carbon economy and the amount currently being invested.

While current investments in clean energy alone are approximately $250 billion per year, the International Energy Agency has estimated that limiting the increase in global temperature to two degrees Celsius above pre-industrial levels requires average additional investments in clean energy of at least $1 trillion per year between now and 2050,” the statement said.    

International policy commitments need to be implemented into national laws and regulations to promote much higher investments in renewable energies and low-carbon technologies, the statement added.

The announcement was coordinated by Ceres’ Investor Network on Climate Risk (INCR) in the United States, the European Institutional Investors Group on Climate Change (IIGCC), the Investors Group on Climate Change (IGCC) in Australia and New Zealand, and the Asia Investor Group on Climate Change (AIGCC) — with the United Nations Environment Programme Finance Initiative (UNEP FI) and Principles for Responsible Investment (PRI).

The investors include BlackRock, the world’s largest asset manager, Swiss Re, the BBC Pension Trust Ltd., New York State Controller and Standard Life Investments.

The statement was published just before UN Secretary-General Ban Ki-moon convened the Climate Summit at the United Nations to spur climate action and facilitate a global climate agreement in 2015.

The international investor community has today made it clear that the status quo on climate policy is not acceptable,” Stephanie Pfeifer, chief executive of the European Institutional Investors Group on Climate Change, said.

Investors are taking action on climate change, from direct investment in renewables to company engagement and reducing exposure to carbon risk,” Pfeifer said. “But to invest in low carbon energy at the scale we need requires stronger policies.”

Mindy Lubber, director of Ceres’ Investor Network on Climate Risk, said it is significant that the largest global institutional investors agree that unmitigated climate change puts their investments at risk.

The financial community has a message for heads of state gathering at the United Nations … we can’t afford to wait any longer for a climate deal,” Lubber said.

The investors also published a 36-page report, Financial Institutions Taking Action on Climate Change, which noted that the finance sector is already contributing to solving the climate change challenge.

The finance sector is increasingly concerned about climate change and some financial institutions are taking action, even in a highly uncertain policy environment,” the report concluded.

It is clear that much work needs to be done, both by the industry and by governments. The task ahead is to build on these actions and move them into mainstream finance. One of the crucial ingredients for this next phase will be the implementation of government policies that have transparency, longevity and certainty.”

Photo: Michael Ashton via Flickr

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