Investors Representing $13T Call for Strong Climate Treaty

The world’s largest global investors–collectively managing more than $13 trillion in assets–issued a joint call today for strong action this year from international policy makers in the fight against global warming.

Amid the growing focus on upcoming international climate treaty talks, 181 investors meeting at a Climate Change Forum in New York issued a statement calling for a strong and binding international treaty that will reduce pollution and catalyze massive global investments in low-carbon technologies.

Co-ordinated by four leading investor groups on climate change the US-based Investor Network on Climate Risk (INCR), the European Institutional Investors Group on Climate Change (IIGCC), the Investors Group on Climate Change (IGCC) in Australia and New Zealand and the United Nations Environment Programme Finance Initiative (UNEP FI) operating globally, the statement formalises the private sector’s requirement for a strong, binding framework to succeed the Kyoto Protocol.

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.

"Unmitigated climate change poses a threat to the global economy, said Stern, chair of the Grantham Research Institute on Climate Change at the London School of Economics and Special Adviser to the Group Chairman of HSBC on Economic Development and Climate Change. "But building a low carbon economy creates opportunities for investment in new technologies that promise to transform our society in the same way as the introduction of electricity or railways did in the past.

The statement calls for the following elements to be included in a global climate change treaty.

  • A global target for emissions reductions of 50-85% by 2050 (1990 baseline)
  • Developed country emissions reduction targets of 80-95% by 2050 with interim targets of 25-40% by 2020 backed up by effective national action plans
  • Developing country action plans that deliver measurable and verifiable emission reductions
  • Government support for energy efficient and low carbon technology
  • Measures that support the move to an effective global carbon market, including ambition caps, fair and efficient allocation of allowances and links between different trading schemes
  • Revisions to the Clean Development Mechanism to ensure real, permanent and verifiable emission reductions
  • Public financing mechanisms that leverage private sector finance for investment in developing countries
  • Measures to reduce deforestation and promote afforestation
  • Support for adaptation to unavoidable climate change impacts

"Climate change has quite rightly been framed as the greatest market failure ever. The magnitude of the negative economic impacts and the potential of climate change to bankrupt our global financial system, as well as to threaten the planet’s life supporting natural ecosystems, are chilling," said Rob Tacon, Chair of UNEP Finance Initiative. The financial services community in general, and long-term institutional investors in particular, can play a critical leadership role in ensuring that capital at scale is directed to the emerging clean, green, low carbon economy that will underpin the most vibrant industries of the future."

"The stage is set for a series of decisions which will be critical to how climate change investment advances post-2012, said Peter Dunscombe, Chairman of IIGCC. "To-date investment decision-making has been hampered by weak, disparate and uncertain policies, as well as short time horizons. The specific measures we have called for today will provide a much more supportive investment environment, thus enabling long-term private sector investment essential to address climate change. Failure to act is an option which carries with it damaging consequences."

Today’s forum comes in advance of key negotiations in Copenhagen this December to ratify a new international climate change treaty after the Kyoto Protocol expires in 2012. 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.

Signatories to the statement include financial institutions, state treasurers, controllers, pension fund leaders, asset managers and foundations worldwide. To see the list of signers, visit the link below.

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