Ahead of UN climate summit, leading investors urge transition to low-carbon economy

By harnessing the power of the sun, the United Arab Emirates is cutting greenhouse gas emissions, generating jobs and a laying the foundation for low-carbon economic progress. Photo: UN

By harnessing the power of the sun, the United Arab Emirates is cutting greenhouse gas emissions, generating jobs and a laying the foundation for low-carbon economic progress. Photo: UN

New York, 18 September 2014 – Just days before United Nations Secretary-General Ban Ki-moon convenes his much-anticipated climate summit, more than 340 global institutional investors representing over $24 trillion in assets are calling on Governments to take action that supports, rather than limits, investments in clean energy and climate solutions.

“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,” said the statement – the largest of its kind by global investors on climate change.

The declaration was coordinated by the four investor groups on climate change – 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 groups are urging policymakers to balance difficult trade-offs between a development agenda and environmental concerns.

“The perception prevails that we need to choose between economic well-being [and] climate stability. The truth is that we need both,” said Achim Steiner, Executive Director of UNEP.

“Having such a critical mass of [investors] demand a transition to the low-carbon and green economy is exactly the signal Governments need in order to move to ambitious action quickly,” he added.

According to the International Energy Agency, the world must invest at least an additional $1 trillion per year – a so called “Clean Trillion” – into clean energy by 2050 to limit global warming to 2 degrees Celsius and avoiding the worst impacts of climate change on our environment, health and the global economy. Yet global investment in clean energy was just $254 billion in 2013.

Mindy Lubber, director of INCR and president of the US-based non-profit sustainability advocacy group, Ceres, said that the financial community has a message for heads of state gathering at the United Nations next week.

“We cannot afford to wait any longer for a climate deal,” she said, emphasizing that unmitigated climate change puts investments at risk.

Investors are already taking action on climate change, from direct investment in renewables to company engagement and reducing exposure to carbon risk, pointed out Stephanie Pfeifer, Chief Executive of IIGCC.

But to invest in low carbon energy on a larger scale requires stronger policies. Next week’s climate summit presents an opportunity for policymakers to ensure pockets of climate leadership turn into mainstream actions.

“The time is now for national governments to overcome the political obstacles that prevent global carbon pricing and hinder long term capital flows into climate mitigation and adaption,” said Fiona Reynolds, managing director of PRI.

Alongside the statement, investors also published a report detailing actions they are already acting on climate change – including through the creation of low carbon funds, company engagement, and reducing exposure to fossil fuel and carbon intensive companies.

UNEP FI is a global partnership between the agency and the financial sector. Over 230 institutions, including banks, insurers and fund managers, work with UNEP to understand the impacts of environmental and social considerations on financial performance.